TAX LAWS VALUE ADDED TAX

POINT OF TAXATION RULES, 2011

POINT OF TAXATION RULES, 2011

(Notification No.18/2011- S.T., dated 1-3-2011 as amended) In excercise of the powers conferred under clause (a) and clause (hhh) of sub-section (2) of the section 94 of the Finance Act,1994, the central Government hereby makes the following rules for the purpose of collection of service tax and determination of rate of service tax namely:-

RULE 1 . SHORT TITLE AND COMMENCEMENT 1. These rules shall be called the Point of Taxation Rules, 2011. 2. They shall come into force on the 1st day of April, 2011.

POINT OF TAXATION RULES, 2011

RULE 2 Definitions. In these rules , unless the context otherwise requires,(a)ACT means the Finance Act,1994 (32 of 1994); (a)associated enterprises shall have the meaning assigned to it section 92A of the Income Tax Act,1961 (43 of 1961); (a)continuous supply of service means any service which is provided, or to be provided continuously, under a contract, for a period exceeding three months, or where the central Government, by a notification in the Official Gazette, prescribes provision of a particular service to be a continuous supply of service, whether or not subject to any conditions. (a)invoice means the invoice referred to in rule 4A of the Service Tax Rules, 1994 and shall inculde any document as referred to in the said rule; (a)point of taxation means the point in time when a service shall be deemed to have been provided;

(a)taxable service means a service which is subjected to service tax, whether or not the same is fully exempt by the Central Government under Section 93 of the Act; 3

POINT OF TAXATION RULES, 2011

RULE 3. Determination of point of taxation For the Purpose of Rules, unless otherwise provided, 'point of taxation' shall be a. the time when the invoice for the service provided or to be provided is issued: Provided that where the invoice is not issued within fourteen days of the completion of the provision of the service, the point of taxation shall be date of such completion. b. in acase, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he received such payment, to the extent of such payment.

Explanation - For the purpose of this rule, wherever any advance by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of 4 receipt of each such advance.

POINT OF TAXATION RULES, 2011

RULE 4 . Determination of point of taxation in case (change in effective rate of tax) .Notwithstanding anything contained in rule 3, the point of taxation in cases where there is a (change in effective rate of tax) in respect of a service, shall be determined in the following manner, namely : a. in case a taxable service has been provided before the (change in effective rate of tax) i. Where the invoice for the same has been issued and the payment received after the (change in effective rate of tax), the point of taxation shall be date of payment or issuing of invoice, whichever is earlier; or ii.where the invoice has also been issued prior to (change in effective rate of tax) but the payment is received after (change in effective rate of tax), the point of taxation shall be the date of issuing of invoice; or

Iii.where the payment is also received before the (change in effective rate of tax), but the invoice for the same has been issued after the 5 (change in effective rate of tax), the point of taxation shall be date of

POINT OF TAXATION RULES, 2011

RULE 4 . Determination of point of taxation in case (change in effective rate of tax) .Notwithstanding anything contained in rule 3, the point of taxation in cases where there is a (change in effective rate of tax) in respect of a service, shall be determined in the following manner, namely : a. in case a taxable service has been provided before the (change in effective rate of tax) i. Where the invoice for the same has been issued and the payment received after the (change in effective rate of tax), the point of taxation shall be date of payment or issuing of invoice, whichever is earlier; or ii.where the invoice has also been issued prior to (change in effective rate of tax) but the payment is received after (change in effective rate of tax), the point of taxation shall be the date of issuing of invoice; or

Iii.where the payment is also received before the (change in effective rate of tax), but the invoice for the same has been issued after the 6 (change in effective rate of tax), the point of taxation shall be date of

POINT OF TAXATION RULES, 2011

b. in case a taxable service has been provided after the (change in effective rate of tax),i. where the payment for the invoice is also made after the (change in effective rate of tax) but the invoice has been issued prior to the (change in effective rate of tax), the point of taxation shall be the date of payment ; or ii. Where the invoice has been issued and the payment for the invoice received before the (change in effective rate of tax), the point of taxation shall be date of receipt of payment or date of issunance of invoice, whichever is earlier; or Iii. Where the invoice has also been raised after the (change in effective rate of tax) but the payment has been received before the (change in effective rate of tax), the point of taxation shall be date of issuing of invoice. Explanation . For the purpose of this rule, change in effective rate of tax shall inculde a change in the portion of value on which tax is payable in terms of notification sissued under the provisions of Finance Act, 1994 or rules made thereunder.
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POINT OF TAXATION RULES, 2011

Rule 5 . Payment of tax in cases of new services Where a service, not being a service covered by rule 6, is taxed for the first time, then;a. no tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable; b. no tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within the period referred to in rule 4A of the service tax rules,1994.

POINT OF TAXATION RULES, 2011

Rule 6. Determination of point of taxation in case of continuous supply of service. Notwithstanding anything contained in rules 3,4 or 8, in case of continuous supply of service, 'the point of taxation' shall be, a. the time when the invoice for the service provided or to be provided is issued: Provided that where the invoice is not issued within fourteen days of the completion of the provision of the service, the point of taxation shall be date of such completion. b. in a case , where the person providing the service, receives a payment before the time specified in caluse (a), the time, when he receives such payment, to the extent of such payment. Explanation 1 For the purpose of this rule, where the provision to the whole or part of the service is determined periodically on the completion of an event in terms of a contract, whcih requires the service receiver to make any payment to service provider, the date of completion of each such event as specified in the contarct shall be deemed to be the date of completion of provision of service.
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POINT OF TAXATION RULES, 2011

Explanation 2 For the purpose of this rule, wherever any advance, by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance. RULE 7 Determination Of point of taxation in case of specified services or persons Notwithstanding anything contained in these rules, the point of taxation in respect of a. the services covered by sub-rule(1) of rule 3 of Export of services rules 2005; b. the persons required to pay tax as receipients under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the finance Act, 1994. c. individuals or proprietary firms od partnership firms providing taxable services referred to in sub-clauses (p), (q), (s), (u), (zzzzm), of clause (105) of section 65 of the finance Act,1994.

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Indirect Tax Structure in India

Import of goods - Customs Duty (Basic Duty + CVD) Manufacture of goods - Excise Duty Sale of goods - Sales Tax Entry of goods in the State / Territorial Limit - Entry Tax / Octroi

Rendering of services - Service Tax

Cumulative burden of Indirect Taxes in India 28% to 44% (approx.)

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Sales Tax Levy

Inter-State and Intra-State Sale Entry 92A of List I - Union List reads : Taxes on the sale and purchase of goods other than newspapers, where such sale or purchase takes place in the course of Inter-state trade or commerce. Entry 54 of list II - State List - reads : Tax on sale or purchase of goods other than newspapers except tax on Inter State sale or purchase. Thus, sale within the State (IntraState sale) is within the authority of State Government, while sale outside State (Inter-State sale) is within the authority of Central Government NEWSPAPER SPECIFICALLY EXCLUDED It can be seen that newspapers are specifically excluded from purview of both Union as well as State list. The obvious reason is that newspapers have a very vital role to play in a democratic society. Freedom of speech and free flow of information is the backbone of democracy and hence newspapers have been excluded from tax. [Otherwise, newspaper are goods, but for the exclusion]. TAXABLE EVENT IN SALES TAX In re Sea Customs Act - AIR 1963 STC 437= (1964) 3 SCR 827 (SC 9 member bench), it was held that in case of sales tax, taxable event is the act of sale. It is not a tax directly on goods.

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Indirect Tax Structure in India

The The

states initially levying a first-point cascade type sales tax.

system suffered from all the weaknesses of Cascading, uncontrolled incidence, Multiplicity of rates etc.
With the deficiencies in the existing tax system, the Government of India (GOI) took the initiative to replace this system with subnational VAT. GOI as a facilitator.

Empowered committee a good example of cooperative federalism.

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Interstate Tax- Earlier Position

CST Act, 1956 to govern principles of taxation of such sales. The tax, however, has been assigned to the states The tax is levied on the basis of origin when goods are sold to another states. For interstates sales while the dealers make use of C form, govt. deptt. uses D form for availing same benefits.

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Background
What

is Value Added Tax (VAT) ?

Tax on Value addition Multi-point taxation A state subject

VAT is a tax on sale or purchase of goods levied at every stage from manufacture or first sale in chain of distribution till the retailer, with a provision to deduct tax paid or payable on purchase from tax payable on sale.

Brief

History

VAT was first introduced in France in 1954 50 Countries switched over to VAT during last decade Over 130 countries worldwide have introduced VAT over the past three decades

Indian VAT
Implemented in all states in a phased manner
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Evolution of VAT

The first preliminary discussion on State-level VAT took place in a meeting of Chief Ministers convened by Dr. Manmohan Singh, the then Union Finance Minister in 1995. - Basic issues on VAT Second State Finance Ministers Committee met in 1998

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Evolution of VAT Meeting of all Chief Ministers, convened on November 16, 1999 by Shri Yashwant Sinha, the then Union Finance Minister

First, before the introduction of State-level VAT, the unhealthy sales tax rate war among the States would have to end and sales tax rates would need to be harmonized by implementing uniform floor rates of sales tax for different categories of commodities with effect from January 1, 2000. Second, in the interest again of harmonisation of incidence of sales tax, the sales-tax-related industrial incentive schemes would also have to be discontinued with effect from January 1, 2000. Third, on the basis of achievement of the first two objectives, steps would be taken by the States for introduction of State-level VAT after adequate preparation. Formation of Empowered Committee of State Finance Ministers under the chairmanship of Dr. Asim Dasgupta.
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Evolution of VAT

Conducting of several rounds of meeting attended by State Finance Ministers, Finance Secretaries and the Commissioners of Commercial Taxes of the State Governments and also MOF officials. Steps have also been taken for necessary training, computerisation and interaction with trade and industry, particularly at the State levels. Interaction with trade and industry is being specially emphasised.

Announcement of introduction of VAT from 01.04.2003

Postponement of VAT implementation to 01.04.2005 Implementation in a short span of time as compared to other countries Compensation to States for the revenue loss Design of State level VAT, striking a federal balance between common points and flexibility for the local characteristics of the States.
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Introduction of SVAT in Indian States

Haryana -18 states -2 States Uttaranchal-Jharkhand -4 states --

April 1, 2003 April 1, 2005 May 1, 2005 Oct 1, 2005 Jan 1, 2006 April 1, 2006 Jan 1, 2007 -Jan 1, 2008.
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Tamil Nadu -UP

Overview of VAT System

Raw Material Supplier Particulars Price of Raw Materials VAT 100.00 TNGST 100.00 Input Tax Paid @ 4% 4.00 4.00 Selling Price 104.00 104.00 Supplier collects Rs.104 from the manufacturer and pays Rs.4 to the Government Manufacturer Particulars Cost of Goods Input Tax Paid @ 4% Total Purchase Cost Product Price Output Tax Charged @ 4% Total Selling Price Tax Payable (6 - 4) Profit (156 - 104 - 2) Particulars Cost of Product Input Tax Paid @ 4% Total Purchase Cost Product Price Output Tax Charged @ 4% Total Selling Price Tax Payable (8 - 6) Profit (208 - 156 - 2)
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VAT 100.00 4.00 104.00 150.00 6.00 156.00 2.00 50.00 VAT 150.00 6.00 156.00 200.00 8.00 208.00 2.00 50.00

TNGST 100.00 4.00 104.00 150.00 6.00 156.00 6.00 46.00 TNGST 150.00 6.00 156.00 200.00 8.00 208.00 8.00 44.00

Retailer

Consumer

Process of Reforms

The Four stages of Reforms

Back

ground work for VAT. of Central and State VAT- A Dual VAT

Introduction

system.
Integration Reforms Reforms

of service tax.

in CST. to have a goods and services tax (GST)

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VAT Structure in India

GLOBAL SCENARIO

All Indirect Taxes

INDIA Phase 1 State Sales Tax and Entry Tax INDIA Phase 2 Phase 1 + Service Tax + Reduction in Rate of CST INDIA Phase 3

VAT / GST

VAT

VAT

Phase 2 + Abolition of CST + All Indirect Taxes except Customs Duty

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VAT

VAT in India - Legislation

Implementation on April 1, 2005

Applicability - Virtually universal Tax on intra-state transaction of goods

Mode - Set off

Tax on inputs to be set-off against tax on final products

Taxes abolished

Turnover tax, Re-sale tax, Surcharge, Special Additional Tax etc.

Entry Tax

Already imposed by States - to be made Vatable Entry tax in lieu of Octroi - not Vatable

Central Sales Tax

To be continued in the first year Position to be reviewed after a year

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 VAT in India - Legislation

VAT not levied on

Inter-state sale / Inter-state branch transfer Exports Imports

Proposal of VAT on imports being discussed Proposed Rs. 10 Lakhs

Dealers below threshold level

No VAT on liquor, lottery tickets, petrol, diesel, aviation turbine fuel

To be governed by State Sales Tax laws

No VAT for a year on items presently attracting AED (sugar, textile and tobacco)

The position to be reviewed

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Current system of SVAT

Three rate categories. 0, 4, 12.5%. Exceptions of 1 and 20%. Petroleum not included. No new incentives. Composition scheme for small dealers.

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VAT in India Rate of Tax

Uniformity in Rates

Exempt Rate - 0%

46 commodities consisting of
natural and unprocessed products; Items legally barred from taxation; and items having social implications

Special Rate - 1%

Gold and silver ornaments

Essential/Mass Consumption Rate - 4%

270 goods comprising basic necessities

medicines and drugs; all agricultural and industrial inputs; capital goods; aluminium, copper, zinc and extrusion Optical fibre and optical fibre cables

Revenue Neutral Rate - 12.5 %

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 VAT in India Rate of Tax

Forms under State Sales Tax laws for concessional rate of tax to be abolished Composition Scheme

Covers dealers having turnover between Rs. 5 Lakhs to Rs. 50 Lakhs Composite rate not specified

States have option to decide turnover limit and rate

No input tax credit available

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VAT COMPUTATION METHODS

VAT can be computed by using either of the three methods detailed below: The Subtraction method:- The tax rate is applied to the difference between the value of output and the cost of input. The Addition method: The value added is computed by adding all the payments that is payable to the factors of production (viz., wages, salaries, interest payments etc). Tax credit method: This entails set-off of the tax paid on inputs from tax collected on sales

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VAT in India - Transitional Provisions - TN

All existing dealers will be automatically registered under VAT

Required to obtain Tax Identification Number (TIN)

Credit available on goods in stock on April 1, 2005

purchased on or after April 1, 2004 Documentary evidence for tax payment

Credit available between July 1, 2005 and December 31, 2005

Incentives

States given option to continue incentive schemes

Subject to VAT chain remaining unaffected

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VAT in India Input Tax Credit Key Concepts

Accrual

Application

VAT paid on inputs VAT paid on Capital Goods Sales Tax paid on Goods lying in stock Entry Tax (not in lieu of Octroi)

VAT payable on Finished Goods CST payable on Inter State Sales Refund in case of exports

Refund of unutilised credit at the end of 2nd year

Input Tax Credit = (A+B) (C+D) Where A = ITC c/f from previous month / year B = ITC accrued during the month / year C = ITC reversed during the month / year D = ITC refunded during the month / year

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 VAT in India Input Tax Credit

VAT credit available in case of:

Within State sales Inter-state sales Export out of India

VAT credit restricted on Inter State Stock Transfer

Available in excess of 4% or CST rate applicable

VAT Credit not available in case of

Inputs used in the manufacture of exempted goods Purchases for other than manufacture/re-sale Purchases made inter State/in-transit Purchases of goods of negative list

Delhi - Fuel in the form of Petrol, Diesel and Kerosene, LPG, CNG, Coal AP - Fuel, Coal and Natural Gas used for power generation Jharkhand - Consumables Tripura Credit available in excess of 4% on petroleum products (other than petrol, ATF and diesel) and other fuels
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 VAT in India Input Tax Credit

VAT credit in case of Capital Goods

Available and to be adjusted over a period of three years

States can reduce this period

Not available on Capital Goods specified in negative list

VAT Credit will be refunded within three months in case of exports Unutilised Credit will be carried over till the end of the succeeding financial year and if it remains unutilised will be refunded. Units in SEZ and EOU have an option of either

Not paying VAT on inputs; or Claim full refund within three months

Input tax credit shall be claimed only on the basis of original purchase invoice issued by registered selling dealer.

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Sale in course of export

Article 286(1)(b) of Constitution of India prohibits imposition of sales tax on import and export by State Government. Since charging section 6(1) of CST Act levies tax only on inter-State sale, naturally, there is no CST on sale during export/import.
What is Sale in course of Export - Section 5 of CST Act defines when a sale or purchase is said to be in course of export as follows : A sale or purchase of goods is deemed to be in course of export of the goods out of the territory of India, only if (a) (b) the sale or purchase either occasions such export or is effected by a transfer of documents of title to goods after the goods have crossed the customs frontiers of India. Section 5(3) states that notwithstanding provisions of section 5(1), last sale or purchase of goods preceding the sale or purchase occasioning the export of those goods out of territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the arrangement or order for or in relation to such export.
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Penultimate sale for export

Export is a specialised business and many small units are unable to export directly. Export is often effected through specialised agencies like Export Houses etc., termed as Merchant Exporters under Foreign Trade Policy. Such indirect exports also need exemption from taxes to make the products competitive. Hence, such penultimate sale, i.e. sale preceding the sale occasioning export is also deemed to be in the course of export under section 5(3) of CST Act and is exempt from tax. Exemption to penultimate sale is subject to the condition that the penultimate sale (i.e. last but one sale) is (a) (a) (b) for purpose of complying with agreement or order in relation to export and such sale is made after the agreement or order in relation to export and same goods which are sold in penultimate sale should be exported.

In other words, the final exporter should be in possession of export order from foreign buyer and should take delivery of goods from the supplier making penultimate sale solely for execution of such export order and export the same goods. PURCHASE PRIOR TO PENULTIMATE SALE NOT EXEMPT - It may be noted that only penultimate sale is exempt but purchases earlier to penultimate sale are not exempt and purchase tax is payable if prescribed.

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Reversal of input tax credit

Reversal of Tax Credit means reversal of Input Tax Credit already claimed and availed on those goods sold, which are subsequently returned or unfructified sale or goods used for personal or business use. The loss, theft, destruction of goods purchased and input tax credit claimed and availed may result into tax reversal. The various discounts offered by selling dealer after completion of sale will also lead to reversal of input tax credit. Input tax credit was claimed but subsequently it was deducted that related purchases are from bogus traders

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Definitions - TNVAT
Input means any goods including capital goods purchased by a dealer in the course of his business.

Input tax means the tax paid or payable under this Act by a registered dealer to another registered dealer on the purchase of goods including capital goods in the course of business.
Output tax means tax payable under this Act by any registered dealer in respect of sale of any goods Taxable goods means goods other than exempted goods specified in the schedule to this act or goods exempted by notification by the government. Sale, dealer and goods found in the VAT Act, are similar to the definitions found in the Sales Tax Act.
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 Capital Goods means

a) Plant, machinery, equipment, apparatus, tools, appliances or electrical installation for producing, making, extracting or processing of any goods or for extracting or for bringing about any change in the substance for the manufacture or final product

b) Pollution Control, Quality Control, Laboratory and Cold Storage

Equipments c) Components, Spare parts and accessories specified at (a) and (b) above (d) Moulds, Dies, Jigs and Fixtures (e) Refractors and Refractory materials

(f) Tubes, Pipes and Fittings and

(g) Storage Tanks
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 Zero rate sale

means a sale of any goods on which no tax is payable but credit for the input tax related to that sale is admissible.

Exempted sale:
Sale of goods specified in the schedule or the goods exempted by notification by the government by any dealer shall be exemption from tax. Significant difference between Zero Rated Sale and Exempted Sale

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Registration Requirements
Dealers whose Total Turnover in respect of Purchase and Sale within the State is not less than Rs. 10 Lakhs Any other dealers whose Total Turnover is not less than Rs.5 Lakhs The following dealers irrespective of the quantum of Turnover in such goods shall get themselves registered: Casual trader; Dealer in bullion, gold, silver and platinum jewellery;

Dealer registered under sub-section (3) of Section 7 of the Central Sales Tax Act, 1956;
Dealer residing outside the State, but carrying on business in the State; Agent of a Non-Resident dealer; Dealer who exports or imports goods
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Tax Invoice
Tax invoice is popularly known as bill which will contain details of sale such as name and address of the purchaser with his TIN number,quantity of goods sold, its value etc and tax charged. This invoice /bill is to be issued in duplicate the original for purchaser and duplicate to be retained by the selling dealer. A registered dealer can claim input tax credit on his purchases, if he holds a valid tax invoice /bill at the time of furnishing his return to assessing authority.

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Tax Payers Identification Number (TIN)

The Tax Payers Identification Number will consist of 11 digit numerals throughout the country. First two characters will represent the State Code as used by the Union Ministry of Home Affairs. The set-up of the next nine characters may,however, be different in different States.

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STRUCTURE OF 11 DIGIT REGISTRATION NUMBER

1 9 4 8 2 0 1 7 0 6 4
State Code Charge Code Number Proper Check Digits

Act Identificatio n Code

VAT=0
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SST=1

CST=2

Return

Returns are to be filed monthly/quarterly as specified in the State Acts/Rules, and will be accompanied with payment challans. Every return furnished by dealers will be scrutinised expeditiously within prescribed time limit from the date of filing the return. If any technical mistake is detected on scrutiny, the dealer will be required to pay the deficit appropriately.

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Procedure of Self-Assessment of VAT Liability

The basic simplification in VAT is that VAT liability will be self-assessed by the dealers themselves in terms of submission of returns upon setting off the tax credit. Return forms as well as other procedures will be simple in all States. There will no longer be compulsory assessment at the end of each year as is existing now.

Audit
Correctness of self-assessment will be checked through a system of Departmental Audit. A certain percentage of the dealers will be taken up for audit every year on a scientific basis. If, however, evasion is detected on audit, the concerned dealer may be taken up for audit for previous periods. This Audit Wing will remain delinked from tax collection wing to remove any bias.

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Record Maintenance
In hard copy or electronic form, in English or other languages
Purchase Account
Sales or Stock Transfer Account Production cum Stock Account for Manufacturers Debit Note and Credit Note

Input Tax Adjustment Account for Inputs & Capital Goods

Records to be maintained for 5 Years

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GUIDANCE NOTE 19/2005 OF ICAI

A COMPREHENSIVE ACCOUNTING TREATMENT FOR STATE LEVEL VAT Accounting Entries for Opening Stock:
VAT Credit Receivable (Inputs) Account
VAT Credit Opening Stock Account

Dr.
Cr.

(In case of VAT credit available immediately)

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Accounting Entries for purchase of input :

Purchase Account VAT Credit Receivable (Input) A/c Dr. Dr.

To Cash / Bank /Supplier A/c

Cr.

The balance in VAT Credit Receivable (Input) Account at the end of the year to be shown in the Asset Side of the Balance Sheet under the head Loans and Advances

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Valuation of Inventories of inputs and final products :

The Guidance note under paragraph 32 clarifies the accounting treatment for inventories to be valued net of input tax. However, in case of inputs obtained from dealers who are exempt from VAT , unregistered dealers etc. where input tax credit is not available should be valued at the actual cost inclusive of the input tax.

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Accounting Entries for Purchase of Capital Goods :

Purchase Account VAT Credit Receivable (Capital goods) A/c - Current year entitlement VAT Credit Deferred (Capital goods) A/c

Dr. Dr.

Dr.

- balance amount not available for credit immediately

To Cash / Bank /Supplier A/c Cr.

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Treatment of ITC in respect of Capital Goods :

The capital goods including components, accessories, tools etc., should be valued net of VAT vide Guidance Note paragraph 36.

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Accounting Entries for utilizing the Input Tax Credit :

VAT Payable Account VAT Credit Receivable (Input ) A/c VAT Credit (Capital goods) A/c To Cash / Bank A/c

Dr. Cr. Cr. Cr.

- Balance amount payable after adjustment of ITC

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Audit by Chartered Accountant:

- position in various States The Karnataka VAT laws have also prescribed the audit provisions for dealers having turnover exceeding Rs.25 Lakhs.

The Andhra Pradesh VAT laws do not contain the direct requirement of VAT audit. However, it has given power to the Commissioner to formulate procedure in this respect.
The Maharashtra VAT laws have prescribed for audit by a Chartered Accountant for dealers having turnover exceeding Rs.40 Lakhs. The Delhi VAT Act, 2004 has the provision of Audit for the dealers having turnover exceeding Rs.40 Lakhs.

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Harmonization Achieved so far

CenVAT at the Central level and StateVAT at the state level. CenVAT up to manufacturing level. StateVAT up to retail. CST already on way to phase out.

Both the tiers have autonomy in tax rates and base but the states have decided to follow uniformity on their own through the Empowered Committee. No compulsions. Own choice.
No incentives to be granted by any state. The old continue.

The task force headed by Dr.Vijay Kelkar had recommended for a comprehensive goods and services tax, which is followed by countries such as Singapore, Canada etc.

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VAT IN INDIA & ABROAD - COMPARISON

WORLDWIDE VAT covers goods & services INDIA

It only covers goods as of now

There is a single national law on VAT There is no excise and other duties.There is just a single VAT rate VAT covers imports, the tax is rebated as goods move in value chain In most systems like European Union, Countries allow credit for tax paid on inter-state transactions Exemptions under VAT are the exception rather than the rule Countries and States use accountingbased controls.

There are as many legislations as states Excise will continue as may be other levies like entry tax There will be no VAT on imports

No credit will be available in India on interstate transactions.

There are many exemptions Physical controls like border check-posts will continue.

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THANK YOU

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