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VAT
Presented by:
BASIC QUESTION
Whether amount collected as tax from the consumer reaches the Government? Answer: Why?
N O!
- @ MRP Rs 100.00 and 12.5% Local Taxes - Consumer Pays Rs. 112.50
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CHAIN OF SALES
Manufacturer
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Chain of Sales and Impact of Tax ( @12.5% Basic tax and 1% Resale Tax)
Channel
Tax Rs.
- @ MRP Rs 100.00 and 12.5% Local Taxes - Consumer Pays Rs. 112.50 Any Change in the price to the Consumer?
NO
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VAT
66
Channel
9.50
TAX STRUCTURE IN INDIA THREE TIERS OF GOVERNMENT 1.UNION GOVERNMENT 2.STATE GOVERNMENT 3.LOCAL BODY
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Purposes and effects of Enforcement of law and public order, Taxation Protection of property,
Economic infrastructure roads, legal tender, Enforcement of contracts, etc., Public works, Social engineering, The operation of government itself. Welfare and public services, such as: Education systems, Health care systems, Pensions for the elderly, Unemployment benefits Energy, water and waste management systems, Public transportation.
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VAT
1010
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By Local Bodies
Octroi Taxes on Property
Different Systems of Sales tax * First Point - Single Stage Tax * Last Point Single Stage Tax * Double Point Tax * Multi Point Tax * Value Added Tax
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VAT
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Larger Taxable Base (More prone to evasion) Multiple Rates Cascading Effect
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Large Base No Cascading Effect Self Policing Lesser Rate Lesser Litigation Transparent
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VAT
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What is VAT?
VAT is not a tax by itself. It is a system under which tax is levied. VAT is a multistage tax to be imposed at final consumption. Levied as a proportion of value added. Covers goods and services.
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1919
1938- Madhya Pradesh introduced Sales tax in the form of Petrol tax. 1939- Tamil Nadu is the First state introduced a Multi-point Sales tax. After World War II, close on the heels of TN, many states resorted to Sales tax. 1956- Central Sales Tax introduced. (Origin based) Till 1980- Sales Tax was Multi- point without Set- Off
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2020
Funds needed for Developmental activities of States are NOT adequately supported by Tax collection.
The system of Sales Tax is highly saturated. Increase of Sales Tax rates was the only option. Industry and Trade is adversely affected leading to : Evasion, Suppression and Unhealthy competition among states.
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-flight of trade,
Industry and Trade is adversely affected leading to : - Flight of trade, - Evasion, - Suppression and - Unhealthy competition among states. States and Union Government felt Tax Reform VAT was the answer.
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Business
VAT charged by a registered business on sales made by the business to its customers
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Credit of VAT paid on purchases within the state. ITC available only to VAT registered dealer on:
- Purchases made from another VAT registered dealer. - Purchase of Goods should be in the course of business. - Goods purchased must be taxable goods as specified in the First Schedule of TNGST Act. - Against a valid VAT invoice. - If the Original invoice/ bill is lost, certified copy of invoice produced.
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VAT
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Goods purchased in the course of business but used for the purchase of providing facility to the proprietor or partner or director or employee. Purchase of Air -conditioner if the dealers are not dealer in Airconditioner Purchase of all automobiles including all vehicles, if the dealers are not dealing in automobile goods. Purchase of goods for free sample or gift or personal use.
(c)
(d)
(e)
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(j) Sale of goods in the course of inter- state trade and commerce without Form- C.
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710 'A' Sold Goods to 'B' 'B' Sold Goods to 'C' 'C' Sold Goods to 'D' 'D' Sold Goods to 'E' Final 1125 1800 2250 2700 2700
60 65 75 50 50 300
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VAT
3232
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Journey has just begun... Major steps in convergeing towrds a single and uniform tax.
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THANK YOU
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