FYBAF SUB: INDIRECT TAXAXTION Dilip Jadeja

(DJ SIR)
SEM II

MVAT: LEVY, COMPOSITION, SET-OFF AND REFUND

PROBLEM ON TAX COMPUTATION:

COMPUTATION OF VAT LIABILITY

Particulars RS RS
VAT on Sales XX
Less: Input tax Credit
Carried forward from previous period.
XX
VAT on Purchase XX (XX)
VAT Payable/ Carried Forward/ Refund Due XX

Note:-1 No input tax credit is available on URD (Unregistered Dealer) Purchases

or Purchases from place outside the State of Maharashtra.

Note:-2 If any input tax credit remains unadjusted than such unadjusted input tax
credit can be carried forward to next period. However, if it is last month i.e.,
March than such unadjusted input tax credit will be refunded by government.

Note:-3 In the absence of information, goods are presumed or assumed to be

Schedule E goods.

Taxes Payable U/S 4:

Every dealer or a person who is liable to pay tax under the Maharashtra Value
Added Tax Act, 2002 and the Maharashtra Value Added Tax Rules, 2005 shall pay
the tax in accordance with the provisions.

Tax Not LEVIABLE on Certain Goods U/S 5:

This section refers to sales or purchase of certain goods free from all taxes. Tax
shall not be payable on the sales or purchase of any goods specified in schedule-A.
The goods specified in Schedule A are totally exempted from tax subject to the
FYBAF SUB: INDIRECT TAXAXTION Dilip Jadeja
(DJ SIR)
SEM II

conditions or exceptions set out against each of the goods specified in column 3 of
schedule A.

1. There are 62 items specified in schedule-A.

2. There are basic goods such as
- Milk
- Bread
- Books
- Agricultural tools
- Fresh vegetable
- Charkha
- Gandhi topi
- Electricity
- Human blood
- Water

Levy of Sales tax on goods specified in the schedule U/S 6:

This section refers to various schedules given under the Maharashtra Value Added
Tax Act, 2002. The rate of sales tax has been specified in column 3 for different
goods in schedule A to E.

The broader classification of goods on various parts of Schedules as well as rate of

tax is as follows as per HSN (Harmonious System of Nomenclature):

Schedule Particulars Rate of Tax

A List of goods which are essential commodities such as 0%
milk, bread, books, potato etc.

B Gold, Silver, Precious Stones, Metals Pears etc. 1%

C (a) Declared goods, industrial inputs and such other 5%

specified goods (4% up to 30th April, 2011)
(b) Other than declared goods (w.e.f. 1.4.2010) 5%

D - Wines, Foreign Liquor, Country Liquor etc 20% or above

- Motor Spirit- Petrol, Diesel etc at specified rate
FYBAF SUB: INDIRECT TAXAXTION Dilip Jadeja
(DJ SIR)
SEM II

E All other goods 12.5%

(Not covered from Schedule A to D)

Rate of Tax on Packing Material U/S 7:

Section 7 deals with packing material. The state rate of packing material is same as
that of sale of goods.

For e.g. Schedule A goods packed in packing material. The rate of tax for said
packing is nil.

For goods packed having rate 12.5% rate of tax for packing material is 12.5%.

For goods packed having rate 5% rate of tax for packing material 5%.

Certain Sales and Purchase not to be Liable to Tax U/S 8:

Section 8 gives list of sale of goods on which state have no power to levy sales tax.
Sales or purchase take place.

1. Outside the State (OMS-Outside Maharashtra State):

For e.g. A of Ahmadabad sold goods to B of Bangalore, Government of
Maharashtra has no power to tax such sales.
2. Import or Export of Goods:
a. M of Mumbai Export goods to G of Germany. State Government has no
power to collect sales tax from such transactions.
b. P of Pune imported machinery from Japan. State Government has no
power to collect sales tax from such transaction.
3. Inter State trade or commerce:
M of Mumbai sold goods to H of Hyderabad. This is interstate sale of goods.
Maharashtra has no power to tax on this transaction MVAT is not leviable.
(CST) Central Sales Tax is leviable.
4. Aircraft fuel and Lubricants:
No tax shall be levied on sale of fuel and lubricants which are filled in any
aircraft registered in a country other than India.
FYBAF SUB: INDIRECT TAXAXTION Dilip Jadeja
(DJ SIR)
SEM II

5. Sale by SEZ/ EOU/ STP/ EHIP:

Sale of goods by Special Economic Zone (SEZ) developer or Export
Oriented Unit (EOU) or by unit in Software Technology Park (STP) or by a
Electronic Hardware Technology Park (EHIP) subject to the terms and
conditions as may be prescribed.
6. Goods Specified in Foreign Trade Policy:
State government can exempt from payment of tax any class of sales of
goods made by registered dealer to any class of dealer specified in the
Export and Import Policy of Government of India. Export-Import policy has
now being renamed as foreign trade policy.
7. Sale to/by Canteen Stores:
8. Textile Processors:
Government can exempt from tax the transfer of property in processing of
specified textile goods.
9. Unit having certificate of entitlement:
10. Sale to Telecommunication company:

Payment of Tax and Recovery:

Composition of Tax u/s 42:

Composition of tax means payment of an amount in lieu of tax or lumpsum

payment of tax. Composition scheme is an optional scheme for certain specified
dealers.

Composition scheme is available to:

The scheme would be as notified by the state government and would be subject
to such conditions and restrictions as may be prescribed. Thus the following
class of dealer can opt for the scheme:

- A Retailer
- Dealers
FYBAF SUB: INDIRECT TAXAXTION Dilip Jadeja
(DJ SIR)
SEM II

- A dealer running an eating house, restaurant, hotel, refreshment room or

caterer who serve food and non-alcoholic drink etc.

Excluded from Composition Scheme:

However the following dealers cannot opt for the scheme of composition:

- A manufacturer
- An importer
- A dealer who purchase goods from registered dealer and effects sales not
liable to tax i.e. interstate sales or export sales.
- A dealer dealing in liquor.

Composition Scheme on Contracts:

The state government may provide scheme of composition of payment of tax on

which contract at 5% of the total contract value in the case of a construction
contract and 8% of total contract value of the works contract in other cases.

Composition Scheme for sale or Flat:

Any registered dealers who undertakes registration of flats, dwellings or building

or premises and transfer them in pursuance of an agreement along with land or
interest under laying the land and in such transaction rate is specified by state
government.

1 ½% Tax on Mandap Keepers:

If a dealer is liable to pay tax on sales effected by way of lease of mandap or

Pandal, he may pay the composition tax of one and half percent of the sale affected
by him.

Problems:

Q.1.The raw material required to manufacture a product Z is purchased as follows:

Particular of R.M Amount (Excluding Tax) Schedule

FYBAF SUB: INDIRECT TAXAXTION Dilip Jadeja
(DJ SIR)
SEM II

F 50,000 C
G 90,000 E
H 12,000 A
The above raw material was purchased from a registered dealer within the State.
The product ‘Z’ was sold for RS.2,00,000 which is covered by schedule E. you are
required to find out the VAT tax payable by the assessee.

Q.2. Mr. Tushar is a Registered Dealers, dealing in product ‘Z’. The Raw Material
required to manufacture the product ‘Z’ is as follows:

Particular of R.M Amount (Excluding Tax) Schedule

N 45,000 C
O 45,000 E
Final product of Z was sold at RS.1,40,000 and VAT tax rate applicable is 5%.
Find out the tax liability under the Value Added Tax Act, 2002.

Q.3. Compute the tax payable under the Maharashtra Value Added Tax Act, 2002
from the following information.

Particulars RS
1. Sale price of the goods covered by Schedule E 20,00,000
2. Purchase of RM covered under Schedule E from Registered
Dealer 10,00,000
3. Purchase of RM covered under Schedule E from Unregistered
Dealer 3,00,000
4. Labour Charges Paid 1,00,000

Q.4. Compute the tax payable under the Maharashtra Value Added Tax Act, 2002
from the following information.

Particulars RS
1. Sale price of the goods covered by Schedule B 10,00,000
2. Purchase of RM covered under Schedule A 3,00,000
3. Purchase of RM covered under Schedule E 2,50,000
4. Labour Charges Paid 2,00,000
FYBAF SUB: INDIRECT TAXAXTION Dilip Jadeja
(DJ SIR)
SEM II

Q.5. Compute the Sales tax payable under MVAT Act, 2002

Particulars Schedules Amount

Sale of Schedule A 2,00,000
Sale of Schedule B 2,00,000
Sale of Schedule C 1,00,000
Sale of Schedule D 20,000
Sale of Schedule E 50,000
Labou charges Received 5,00,000
Set-off available for the month is 20,000

Q.6. Compute the Sales tax payable under MVAT Act, 2002

Particulars Schedules Amount

Sale of Schedule A 50,000
Sale of Schedule B 75,000
Sale of Schedule C 2,00,000
Sale of Schedule D 1,00,000
Sale of Schedule E 2,00,000
Set-off available for the month is RS.20,000.

Q.7. Mr. Ram made the following sales of 4 products and VAT applicable is
provided in the following table.

Period Total Sales AD (20%) AB (1%) AC (5%) AE (12.5%)

June 8,00,000 2,00,000 1,00,000 2,00,000 3,00,000
July 8,00,000 1,00,000 2,00,000 3,00,000 1,00,000
August 8,00,000 2,00,000 3,00,000 1,00,000 1,00,000
He made the following purchases of raw material for respective product.

Period Total RM-1 RM-2 RM-3 RM-4

Purchases
June 5,10,000 1,00,000 75,000 1,25,000 2,10,000
July 5,25,000 50,000 1,50,000 2,50,000 75,000
August 5,25,000 1,45,000 2,25,000 75,000 80,000

1. RM-1 is covered by Schedule A used to manufacture AD

FYBAF SUB: INDIRECT TAXAXTION Dilip Jadeja
(DJ SIR)
SEM II

2. RM-2 is covered by Schedule B used to manufacture AB

3. RM-3 is covered by Schedule C used to manufacture AC
4. RM-4 is covered by Schedule E used to manufacture AE
5. Set-off available as on 1st June is RS.75,125.
Compute the amount of set-off and VAT tax payable.

Q.8. From the following information compute the Net Sales Tax Liability under
VAT Act, 2002.

Period Total Sales FP-1 Sch. B FP-2 Sch. C FP-3 Sch. E

April 15,00,000 4,00,000 5,00,000 6,00,000
May 18,00,000 5,00,000 6,00,000 7,00,000
June 17,00,000 6,00,000 7,00,000 4,00,000
Raw Material consumed for preparing final product (FP).

Period Total RM-1 RM-2 RM-3

Purchases
April 10,90,000 3,80,000 3,50,000 3,60,000
May 9,80,000 3,00,000 3,30,000 3,50,000
June 14,00,000 5,40,000 5,60,000 2,00,000
RM-1 is covered by Schedule B used to prepare FP-1.
RM-2 is covered by Schedule C used to prepare FP-2.
RM-3 is covered by Schedule D used to prepare FP-3.
Show statement of computation of tax under MVAT Act, 2002 from the above
details.

Q.9. Mr. Rohan, a registered dealer of a product covered under Schedule E sell
goods for RS.17,50,000. The purchases required for the product is produced from
registered dealers within the state under:
Material X covered by Schedule C RS.12,00,000
Material Y covered by Schedule E RS. 2,00,000.
Mr. Rohan had an opning balance ( Credit) in VAT credit receivable account of
RS.5,000. Mr. Rohan had utilized material Y for manufacture of tax free goods.
Calculate the tax payable under MVAT Act,2002.