The Value Added Tax System of taxation of sales of goods in Maharashtra is effective from 1st April, 2005. The following explains some of the basic issues:
TREATMENT OF CLOSING STOCK AS ON 31ST MARCH, 2005
This explains the treatment of closing stock as on 31st March, 2005.
1. Set-off of the tax paid on purchases in closing stock is available if goods in stock are resold after 1st April, 2005 upto 31st December, 2005.
2. (a) The dealers who wish to claim set-off on closing stock have to furnish statement of closing stock upto 30th April, 2005, whereas
(b) Manufactures, Importers, Retailers under composition, Drugs and medicine dealers related to schedule entry C-29 of VAT Act, 2002, need not furnish statement of closing stock.
3. (a) Set-off will be available on purchases covered by Bombay Sales Tax Rules, 1959 applicable as on 31st March 2005;
(b) In respect of purchases covered by any of the earlier laws other than Bombay Sales Act, 1959, set-off will be available of sum collected separately from claimant dealer.
4. Goods held as on 31.03.2005 by trade originally manufactured by an exempted unit under Package Scheme of Incentives are to be taxed on the margin of gross profit at the scheduled rate of tax in VAT.
COMPOSITION SCHEME FOR RETAILERS
1. Turnover limit of Rs. 50 lakh for retailers opting for composition. Note: The Maharashtra Government has moved the Empowered Committee of State Finance Ministers to all retailers.
2. Composition scheme is available to the dealer satisfying following criteria
(a) Atleast 90%of sales are made to persons who are dealers. (i.e. consumers)
(b) He should not be a manufacturer or importer.
(c) He should not effect inter-state purchase after 1st April, 2005.
(d) He should not be selling liquor.
3. Rate of Tax:
(a) 8% on the difference of the total of all sales and of all purchases (including tax, if any) during the return period.
(i) The selling dealer should not collect tax separately on sales.
(ii) The selling dealer should not claim set-off
(b) For the return period 1st April, 2005 to 30th September, 2006 the retailer should consider only 5/6thn of the turnover of sales instead of the total of all sales.
4. Other Facts:
(a) Need not issue “tax invoice” – he should issue bill/cash memorandum.
(b)Bill/ Cash memorandum should cont6ain the following particulars:
(i) should be serially numbered;
(ii) signed and dated;
(iii) give full name and style of business;
(iv) address of place of business;
(v) number of his certificate of registration;
(vi) particulars of goods sold (quantity/number etc.) and sale price thereof
(c) Bill/cash memo must also contain the following certificate_
“I/we hereby certify that my/our registration certificate under the Maharahtra Value Added Tax Act, 2002 is in force on the date on which sale of goods specified in this bill/cash memorandum is made by we/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 while filing my returns”.
1. The registered dealer under VAT may issue tax invoice. If he issues tax invoice then only the purchasing dealer can claim set-off on his purchases.
2. The registered dealers opting for composition scheme need not issue tax invoice. He may issue bill or cash memorandum.
3. An unregistered dealer can not issue tax invoice.
4. The Tax invoice shall contain the following particulars on the original as well as on all copies thereof:-
(i) The word “tax invoice” in bold letters at the top or at any prominent place. Rubber stamp may be used for this purpose (For old stationery)
(ii) Certificate as below to be printed on invoice (Rubber stamp may be used for old stationery)
“I / We hereby certify that my / our registration certificate under the Maharashtra Value Added Tax Act, 2002 is in force on the date on which the sale of goods specified in this “tax invoice” is made by me / us and that the transaction of sale covered by this “tax invoice” has been effected by me / us and it shall be accounted for in the turnover of sales while filing of return and the due tax, if any, payable on the sale has been paid or shall be paid”.
(iii) The name, address and registration certificate number of the selling dealer.
(iv) An individualised serialised number and date on which the tax invoice is issued.
(v) Description of the goods, the quantity or as the case may be, number and price of goods sold.
(vi) The rate of tax and amount of tax charged thereon must be indicated separately; and
(vii) Signed by the selling dealer or by a duly authorised person.
(viii) Other norms are similar to the requirements of the earlier Bombay Sales Tax, 1959 (now repealed)
N.B. There is no prescribed format in which the tax invoice is to be raised. The registered dealer may use a format suitable to his business needs.
HIGHLIGHTS OF SET-OFF UNDER VAT
1. Full set-off is available to the dealers on purchase effected on “tax invoice” –where VAT is separately on or after 1st April, 2005.
2. Set-off is also available on manufacturing of tax free goods and branch transfers outside the State but only in excess of 4%.
3. Set-off is available for dealers under Works Contract under normal VAT rules and norms as well as under the composition scheme.
4. Set-off available for FL-II Liquor retail shops on similar pattern as existed under BST Rules, 1959.
Dealers in second hand passenger cars subjected to a 4% VAT but entitled to set-off of the taxes paid to their vendor on purchases made for reconditioning the car.
I. Who needs a new Registration ?
1. All existing dealers registered under Bombay Sales Tax Act, 1959 (BST) whose turnover in F.Y.2004-2005 e4xceeds Rs. Five lakh need not apply for new certificate or new number. The old number under BST will continue.
2. Dealers who are not registered under BST but are registered under any other earlier (repealed) Acts, have to apply for new R.C. Number.
3. Voluntary registration is available without any deposit amount.
4. For Voluntary registration, Income Tax PAN and introduction by another registered dealer or Tax Consultant is required.
II Books of Accounts: Quite simple, only an additional column of VAT tax paid on purchases and for VAT levied on sales are to be added in the purchase and sale register respectively. Other books of accounts remain the same.
III Periodicity of Returns: Made much fewer. New norms are as follows:-
(i) Tax liability in 2004-05 more than Rs. 1 Lakh - Monthly
(ii) Tax liability in 2004-05 between Rs. 12000 to 1 Lakh - Quarterly
(iii) Tax liability in 2004-05 below Rs. 12000 - Six monthly
Retailers under composition - Six monthly