Maharashtra Value Added Tax Act

Who is Dealer Under Sec. 2(8) Dealer means any PERSON who buys or sells goods in the state in connection with his business. When a Dealer required to REGISTERED (Under Sec. 16 ) under a MVAT Act, 2002 If a dealer is a importer and T\O exceeds Rs. 1,00,000/- AND taxable sale or purchase exceeds Rs. 10,000/- OR If a dealer T\O exceeds Rs. 5,00,000/- AND taxable sale or purchase exceeds Rs. 10,000 A Registered Dealer must prepare INVOICE as per the MVAT Act, 2002 --- On the top must written the word TAX INVOICE As per the MVAT act, it is necessary to generate tax invoice or cash memo if value is more than Rs. 50/--- Without a proper tax invoice it is not possible to take credit of tax paid on purchases. It must show Date, Name, Address & R.C. no. of Seller and also Name and Address of Buyer (Complete Address) . --- It must contain a declaration I/We here by certify that my/our registration certification under the MVAT Act, 2002 is in force on the date on which sale of goods specified in this tax invoice is made by me/us and that the transaction of sale covered by this bill/cash memorandum has been effected by me and it shall be accounted for in the turnover of sales filing my return. Periodicity of Filing of Return Sr. No. 1. Category Periodicity

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A) Newly registered dealers OR Half yearly B) Retailers opted for composition Scheme OR C) If the Tax liability < Rs. 1 Lakh in the previous year, or Refund entitlement up to 1 Rs. 10 Lakhs. A) Dealer under Package Scheme of 1 1 Quartely 22Incentive OR B) If Tax liability in the previous year 1 lakh but < 10 lakh or Refund entitlement up to Rs. 10 Lakhs or refund entitlement exceeds Rs. 10 lakhs but up to Rs. 1 Crore All other dealers whose tax liability. In the Monthly previous year, exceeds Rs. 10 lakhs or refund entitlement exceeding Rs. 1 crore.

 Forms To be Used OLD For m 221 NE W For m 231 Whom to Apply

For dealers other than (i) dealers who have opted for composition of tax. (ii) dealers executing works contracts. (iii) dealers engaged in transfer of right to use any goods for any purpose All dealers who have opted for composition of tax whose entire turnover is under composition other than , (i) works contractors opting for composition ,and (ii) dealers opting for composition for part of the business. All dealers who are (i) executing works contracts, (ii) Engaged in the activity of transfer of right to use any goods for any purpose. All dealers under package scheme of incentives, are holding Cert. of Ent. Notified oil companies.

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Documents required for the purposes of Registration The Commissioner of Sales Tax, Maharashtra, has issued a circular dated 4th May, 2005, whereby a dealer is required to submit following documents along with the application for registration in Form 101: Documents to be submitted along with the application for registration: (Note: Copies of documents must be self-attested and are subject to verification from the original)

A. In case of fresh registration: 1. Proof of constitution of business (as appropriate):

i. ii. In case of proprietary firm: In case of partnership firm: (Registered or unregistered) No proof required. Copy of partnership deed. Copy of Memorandum of Association and Articles of Association. Copy of relevant documents.

iii In case of company: . iv In case of other constitution: . B.

2. Proof of permanent residential address* (please provide at least 2

documents out of the following documents): i. Copy of ration card. ii. Copy of passport. iii. Copy of driving licence.

iv. v. vi.

Copy of election photo identity card. Copy of property card or latest receipt of property tax of Municipal Corporation/Council/ Grampanchayat as the case may be. Copy of latest paid electricity bill in the name of the applicant.

3. Proof of place of business: i. In case of owner: ii In case of . tenant/subtenant: Proof of ownership of premises, viz. copy of property card or ownership deed or agreement with the builder or any other relevant documents. Proof of tenancy/sub-tenancy like copy of tenancy agreement or rent receipt or leave and licence or consent letter, etc.

4. Two latest passport size photographs of the applicant ** 5. Copy of Income Tax Assessment Order having PAN or copy of PAN
card (in case of Proprietary business: PAN of Proprietor; in case of partnership business: PAN of partnership firm and of all partners; and in case of registered company: PAN of the company; in case of HUF: PAN of HUF and Karta etc.). 6. Challan in original showing payment of registration fee.

B. Registration in case of change in constitution of the dealer:

1. Proof of change in constitution (e.g. if proprietary dealer converted to partnership firm then copy of Partnership deed, etc.). 2. Copy of latest return-cum-challan. 3. Challan in original showing payment of registration fee. 4. PAN of new firm. B. Registration in case of change in place of business: 1. Proof of new place of business as given in A-3 above. 2. Copy of latest return-cum-challan of the dealer. 3. Challan in original showing payment of registration fee. C. Registration in case of transfer of business: 1. All documents from 1 to 6 given in A. 2. Copy of transfer deed. 3. Copy of latest return-cum-challan of the original dealer. * In case of partnership firm, proof of residence has to be provided for all partners, in case of body corporate, proof of residence of applicant. ** In case of partnership firm, photographs of only applicant partner need to be submitted. In case of corporate bodies, the details of place of residence and PAN, etc. shall be required to be furnished only for the signatory to the application. Further, in case of Voluntary Registration, it is necessary that the applicant dealer is having a current bank account and such dealer has to

be introduced either by a registered dealer or by an advocate, chartered accountant or sales tax practitioner. (There is no requirement for any deposit or advance payment as was there under the earlier law).

D. Rate of Tax: [Secs. 5 & 6] as per

Schedules : Schedule A Schedule B Schedule C Schedule D Schedule E Essential Commodities (Tax free) Gold, Silver, Precious Stones, Pearls etc. Nil 1%

Declared Goods, Industrial Inputs,and such other specified 4% goods Foreign Liquor, Country Liquor etc.Motor Spirits at specified rates All other goods (not covered by A to D) 20% 12.50 %

Tax payable by a Dealer: [Sec 4] A dealer is liable to pay tax on the turnover of sales of goods, within the State, as per the rates specified in the schedules. The tax so payable for any tax period shall be reduced by the amount of input tax credit (set off) for which the dealer is eligible during the same tax period. Tax Period Tax Period in relation to a dealer may be a Calendar Month, Quarter (a period of three month; i.e., Apr to Jun, July to Sep, Oct to Dec and Jan to Mar) or six months (prescribed period of six months; i.e., April to September and October to March). FILING OF RETURNS AND PAYMENT OF TAXES Every Registered Dealer shall be required to file correct, complete and self-consistent return, in prescribed form, by the due date. [Sec 20, Rules 17 to 20] Periodicity and due date: Category of Dealers (a Specified Dealers Dealers covered by ) Notification u/s 41(4) (b Retailers- Who have opted for Composition ) Scheme (c Others) (i) Tax liability during previous year,Rs. 6 Monthly 25 days Periodici Due date ty Monthly 15 days

6 Monthly 25 days

12000/- or less (ii) Tax liability during previous year, more than Rs.12000/- but does not exceeds Rs. 1 lakh Quarterly 25 days

(iii Tax liability during previous year, exceeds Monthly ) Rs. 1 lakh

25 days(For the months of Jan and Feb, 20 days)

Tax Liability for the purpose means aggregate of taxes payable by a registered dealer, in respect of all places of business within the State of Maharashtra, under the Central Sales Tax Act and MVAT Act/Bombay Sales Tax Act, after adjustment of amount of set off claimed.

Electronically Filing of Return with Department Based on the fulfillment of requirement --- A Dealer whose tax liability in previous year was equal to or above 1 crore have to file return electronically from Feb. 2008. --- The Dealer whose tax liability in previous year was equal to above 10 lakh have to file return electronically from May 2008 onwards.

As per the MVAT Act, 2002 VAT is applicable from 1st April 2005. Only a Chartered
Accountant and Cost Accountant can do a VAT audit.

VAT audit applicable to As per MVAT Act, 2002 if:

T.O. of sales or purchases exceeds Rs. 40 lakhs. Holds a Liquor licence Sales and Purchases : Includes Generally accepted accounting principles cannot be applied for the determination of turnover of sale and purchase Sales / Purchase of Local sale and purchase. Inter- State. In the course of exports. In the course of imports. Works Contracts, Processing Work, Job,Work involving use of material. Lease Tranctions. Purchases / Sales of Capital Assets. Disposal of scrap, waste, by-products Sales. Purchase of licences, Quota, DEPB. Royalty for Technical Know-how. Patents, Trademarks, Copyrights, Franchisee Agreement. Recoveries from employees for meals. Sales of Confiscated goods by Banks Financial Institution Disposals of salvage by Deemed Dealers Administrative Purchases

 SET OFF AVAILABLE ON PURCHASE

As per rule 51 any stock held as on 31st March 2005, set-off is allowed on that subject to Declaration of stock submitted with Department as on appointed day. As per rule 52 Claim and grant of set-off in respect of purchases made in the periods commencing on or after the appointed day (i.e. 1\4\2005 ). the sum collected separately from the claimant dealer by the other registered dealer by way of " tax " on the purchases made by the claimant dealer from registered dealer of goods being capital assets and goods the purchases of which are debited to the profit and loss account or, as the case may be, the trading account tax paid in respect of any entry made after the appointed day under the Maharashtra Tax on the Entry of Motor Vehicles into Local Areas Act, 1987,

As per rule 53 REDUCTION OF SETOFF The set-off available shall be reduced in part or full in the event of any of the contingencies specified below and to the extent specified. If the dealer used any taxable goods as fuel, then an amount equal to 3% (4% till 31\3\2007) of the purchase price shall be reduced from the amount of set-off. If any taxable material used for manufacturing of tax free goods other than sugar or fabrics to which entry 45 of sch. A applies and are sold in course of export then an amount equal to 3% (4% till 31\3\2007) of the purchase price shall be reduced (other than the goods treated as a capital assets or used as a fuel). If the claimant dealer resells any tax free goods and the tax-free goods are packed in any material, then an amount equal to 3% (4% till 31\3\2007) of the purchase price of the packing materials reduced. Transfer of taxable goods to branch outside the state than an amount equal to 3% (4% till 31\3\2007) of the purchase price reduced (other than the goods treated as capital assets or used as a fuel). If a dealer involved in the execution of works contract then pay tax by 1) set-off allowed by the fraction 16/25 where the dealer has opted to @ 8% on the of contract value

2) periods starting on or after 20st June 2006 set off allowed is calculated reducing a sum equal to 4% of the purchase price on which such set-off is calculated where the dealer has opted to pay tax @ 5% on the total contract value in the case of construction contracts.

If the business is discontinued and it is not continued by any other person,

then the set-off on purchases held in stock at the time of discontinuance shall be disallowed. If out of the gross receipts of a dealer in any year, receipts on account of sale are less than fifty per cent. of the total receipts, then set off will be

purchases service of

a) If a dealer is a hotel or club, entitled to claim set-off only on the of capital assets and consumables pertaining to the kitchens and food and drinks

(b) If the dealer is not a hotel or restaurant, the dealer shall be entitled to claim set-off only on those purchases effected in that year where the corresponding goods are sold within six months of the date of purchase or are consigned within the said period, not by way of sale to another State, to oneself or ones agent or purchases of packing materials used for packing of such goods sold, resold or consigned

If Dealer is holding liquor Vendor licence, and were actual sale price less is less
than the MRP, then set off allowed as per the formula. (Rule 7A w.e.f. 8\9\06) If the claimant dealer has purchased office equipment, furniture or fixtures and has treated them as capital assets and he is not engaged in the business of transferring the right to use these goods then the set-off entitled shall be reduced by 3% (4% till 31\3\2007) of the purchase price

Non Admissibility of Set Off - As per rule 54 ( Negative List ) Purchases of motor vehicles, if treated as capital assets and parts, components and accessories thereof. Purchases of motor spirits as notified u/s 41(4) unless it is resold or transferred to Branch or agent outside the state. Purchase of crude oil if it used by an oil refinery for refining;

If a Dealer is principle engaged in to the business of job work or labour work

and where only waste or scrap sold than no set off granted on capital assets and consumables. Any purchase of goods of incorporeal or intangible nature other than, (i) import licence, export permit or licence or quota, credit of duty entitlement pass book Duty free replenishment Certificate, SIM cards; (ii) software in the hands of a dealer who is trading in software; (iii) Copyright which is resold within twelve months of the date of purchase."

purchases effected by the employer by way of works contract when the

contract results in immovable property other than plant and machinery; purchases of any goods by a dealer, the property in which is not transferred [whether as goods or in some other form] to any other person, which are used in the erection of immovable property other than plant and machinery purchases of Indian Made Foreign Liquor or of country Liquor if the dealer has opted for composition under sub-section (2) of section 42, purchases of office equipment, furniture, fixture and electrical between the 1st April 2005 and ending on the 7th September 2006 treated by the claimant dealer as capital assets

OTHER POINTS

Goods return must be verified that when it is sold .

New 704 form New form Divided into 3 Parts, 1. Part 1 Certification and 3 table, Table 1-General Information, Table 2- Analysis of working of VAT and CST, Table 3-Comment on different as per Return and Audit. 2. Part II General Information, ratio and P.T information 3. Part III consist of VI Schedule and other working