Escolar Documentos
Profissional Documentos
Cultura Documentos
provisions
Vikas Gupta
By
The State Govt.
*Custom Duties
*Central Excise Duty
Service Tax
Customs Duty
Methodology of Custom
Duty Calculation
S.
No.
Particulars
CIF
Assessable Value
Amount
(Rs)
Percenta
ge
10,00,000
100%
10,000
1%
10,10,000
101%
1,01,000
10%
11,11,000
111%
1,14,434
10.3%
2,15,433
6,463
3%
49,276
4%
Excise Duty
S1
State
UP
C Form
Local Sale
VAT
S2
State
Haryana
MANUFACTURER (HARYANA)
2% CST
Local Sale
VAT
Local Sale
State
Delhi
Depot
VAT
State
Delhi
Dealer
Local Sale
State
Delhi
Customer
VAT
State
Delhi
Dealer
State
Delhi
Customer
Export
State
Delhi
0% Tax
UK
Supported by
Form C
Without Form
C
Declared Goods
2%
4%
Exempted Goods
Exempt
Exempt
1%
1% (No C form
required)
1%
4%
2%
4%
12.5%
2%
12.5%
Forms
Bihar
Jharkhand
WB
Chattisgarh
MP
Gujarat
Orissa
Maharashtra
Goa
Karnataka
AP
Pondicherry
Kerala
Assam
Tamil Nadu
State
Haryana
State
Delhi
State
Sales Tax Act
State
Sales Tax Act
CST ACT
State
VAT Act
Sales tax is a tax on sales of movable goods
State
VAT Act
Concept of VAT
No way different from Local Sales Tax (LST) with respect to the
fundamentals, however, method of levy differs in the two system
The traditional system of levying taxFirst Point Tax - Avoid cascading effect but Govt. loses its control on
last point sales with added value - leakage of revenue due to various
tax management in the subsequent sales after First Point.
Next Point Tax (especially for banded goods) - Burden of tax is shifted
to the next point
Last Point Tax- Govt. gets revenue on value addition up to last point
but loses its control on origin of manufacture - possibility for leakage
of revenue / escaped taxation Not popular with Govt.
Multipoint Tax- The Govt. keeps control on overall sales but cost
increases due to cascading nature of taxation
Concept of VAT
VAT is a solution to overcome all the above problems and acceptable
both to the Assessor (Govt.) and the Assessee (Dealer)
VAT in common man's language is a tax levied on the value added to
any product or service AT EVERY STAGE
Destination based tax system
Sales to Registered Dealer by a Registered Dealer
Provision for input tax credit paid at the previous point of purchase.
The tax paid by a registered dealer is netted.
Tax is ultimately borne by the consumer
VAT Chain
Manufacturer
Purchase
Wholesaler
Full Tax credit
Retailer to Consumer
No Tax credit
Consumer
V
A
T
Wholesaler
to Retailer
VAT Chain
Stage
Sale
price
Value
addition
VAT
@10
%
1st
100
10
2nd
140
40
3rd
150
10
4th
155
0.5
1st
Point Sale
Manufacturer
/Importer
2nd Point Sale
Wholesale dealer
3rd Point Sale
Distributors
Small time Retail Sellers
State 2
Stock transfer
(No sales tax)
Manufacturer
Inter State purchase
(CST)
Local purchase
(Local sales tax)
Customer
(No sales tax)
Distributor
Interstate sale
(CST)
Retailer
Depot/CSA
Stock transfer
(No tax)
Retail sales
(Local sales tax
after limited credit of
LST)
Customer
Customer
State 2
Stock transfer
Distributor
(No sales tax) (Possible entry tax
& Possible denial of credit in
exporting State
(Possible tax on entry in State 2)
Manufacturer
Inter State purchase
(CST) + Possible Entry
Tax
Customer
(No sales tax)
VAT after Credit
Interstate sale
(CST)
Stock transfer
(No tax) (Possible
entry tax in State 2.
Possible denial of
credit in State 1
Retail sales
(Local sales tax
Local purchase
(Local sales tax) after limited credit of
LST) VAT after full Credit
VAT
Depot/CSA
Stockist
Retailer
(VAT after credit)
(No sales tax)
Customer
Retail sales
Customer
VAT Credit
Full VAT credit paid within state
Tax paid on inputs both for intra-state & inter-state sale
Total Input tax for a period and not based on input/ output ratio
(variation among States)
Credit for unsold stocks allowed
Exclusions from VAT Credit
Petrol
Diesel
Aviation Turbine Fuel
Non VAT Taxes (SAT ? & Entry Tax)
VAT Rates
Liquor - 20%
VAT in UP
Value Added Tax (VAT) was adopted by UP on 1st April 2006
Registration
1. Threshold limit Rs 5 Lacs
2. Auto Registration for Registered Dealer Form VII & VIII within
60 days.
3. Compulsory for Transporters, Carriers, Forwarding Agents,
Railway Agents etc. transporting / storing goods.
Tax Payers Identification No (TIN):- Allotted on Form number 15
Mandatory to
quote on all Correspondences / Return / Challan / Tax invoice etc.
Composition Scheme :- Specified for Small Traders - 5 to 50 Lakhs
@ VAT 1%.
VAT Rates in UP
Four rates have been prescribed
Schedule: I - 0% for exempted goods.
Schedule: II - 4%: for manufacturing inputs & IT Products &
GSM.
Schedule: III -1%: for gold and precious stone.
Input tax
procurement of goods.
tools
appliances,
electrical
installation
used
for
VAT Chart
If the Contract is divisible then, the supply of material is a Sale Contract and the
labour portion is WC. If in the Labour portion, material is also used then VAT (WC)
is applicable.
Local WC are covered under the Local VAT Act & Inter-state WC are covered under
the Central Sales Tax Act.
If the thing to be delivered has any individual existence before the delivery as the
property of the party who is to deliver it, then it is a Sale. If the main object of the
work undertaken is not the transfer of a chattel qua chattel, the contract is one for
work & labor (Hindustan Shipyard 119 STC 533 SC).
In a Contract of Sale, the main object is the transfer of property and delivery of the
possession of Chattel as a Chattel to the buyer, where it is not so, it is a contract of
Works & Labour (Hindustan Aeronautics Ltd. 55-STC 314 -SC)
It is made clear that contract of building buses, ships are that of the Sale even if
they are manufactured as per the specifications and under strict supervision of the
buyer. (Hindustan Shipyard 119 STC 533 SC).
Works Contract is a
Deemed Sale
The Scenario before the 46th Constitutional Amendment (Before 2nd Feb, 1982)
The Sales of goods covered under the sale of goods Act were only liable for
Sales tax (only normal sales were covered)
The Indivisible WCs were not covered under the State Sales tax Laws. The
states were not empowered to levy Sales tax on Indivisible WCs.
The 46th Amendment to the Constitution of India Sub-article (29-4) reads as under:
(b) a tax on the transfer of property in goods (whether a goods or in some other
form) involved in the execution of a Works Contract
The concept of Deemed Sale under the State VAT / CST Acts:
The Sales tax/VAT/CST is applicable only on the value of the goods and
not on labour portion of the Contract.
The
clauses
in
the
Agreement and intentions
of the two parties is an
important factor.
State A
Contractee
Y
State A
Contractee
Y
State A
Contractee
Y
The
clauses
in
the
Agreement and intentions
of the two parties is an
important factor.
Activities covered
under Works Contract
1.
Construction Jobs
2.
Civil Work
3.
4.
5.
Repair Jobs
6.
7.
8.
9.
Electrical fittings.
10.
11.
Air-conditioning installations.
12.
Painting jobs.
13.
Repairs of vehicles.
14.
15.
Applicability of VAT on
various Works Contracts
Indivisible /
Composite Works
Contracts
Job Works
Construction
Contract
Erection of Plant
& Machinery
EPC Contracts
Installation &
Commissioning of
Lifts / Elevators
Civil Works
Processing
Conversion Jobs
Repair of
Vehicles
Repair Jobs
Electro Plating,
Electro
galvanizing,
anodizing and
like
Customized
Printing Jobs
VAT Applicable
VAT Applicable
No VAT Applicable
Art Works
No VAT Applicable
No VAT/CST is applicable on pure labour jobs where no material of his own is used
/ added by the job worker (vendor).
2.
3.
To arrive at the Material Value in the Contract, three methods are adopted under
the State VAT Acts namely :
i.
Actual Non-material Deduction Method
ii.
Standard Deduction Method
iii. Composition Tax Method (Non-legal Method.)
4.
VAT Setoff / Credit is available under the State VAT Acts to both the Contractor &
Contractee except for the Negative List items purchased
5.
For Divisible Contract, supply of material is a Normal Sale Contract and the Labour
Contract is subject to VAT (WC) provisions, only if the own material is used by the
Contractor.
6.
If the Contractor dispatches his own materials from one state to another, directly to
the customer under the Indivisible WC, then it is a deemed inter-state sale of
material subject to levy of CST by the state of dispatch.
Contract Price
Rs.100.00
Rs. 80.00
Material Value
Rs. 20.00
Material Value
@ 12.5% VAT on
Rs.20.00
Rs.
TAX INVOICE
Rs.100.00
TAX INVOICE
VAT @ 12.5% on
Rs.20.00
Rs.
Rs.100.00
Contract Price
Rs.100.00
Rs. 25.00
@ 8% Composition Tax on
Rs.100
Rs.
Material)
2.50
2.50
Rs.
0.50
Contract Price
Rs.102.50
VAT PAYABLE (2.50
OPTION B (COMPOSITION)
Rs. 75.00
Rs. 9.38
Rs.109.38
Rs.108.00
Rs. 9.38
Rs.100.00
Rs.
7.38
8.00
INVOICE
Contract Price
Rs.100.00
@ 8% Composition Tax
Rs.
Rs.108.00
Rs.
8.00
6.72
Service Tax
Classification of Services
If prima facie, a taxable service is classifiable under two or more sub-clauses
of section 65(105), classification shall be effected as per following rules
Specific description to be preferred over a general description [section
65(2)(a)]
Classification should be as per essential character in case of composite
services [section 65(2)(b)]
Service which appears earlier in list of section 65(105), if service cannot be
classified on above basis [section 65(2)(c)]
Service should be predominantly a taxable service. A composite contract
consisting various services cannot be vivisected. An indivisible/composite
contract of goods and services can be vivisected and service part of it is
subject to service tax
CENVAT Credit
Service provider can avail CENVAT credit of service tax paid on input services
and excise duty paid on inputs and capital goods. The credit can be utilised
for payment of service tax on output services
Definition of input service is wide. Any service in relation to business is input
service
Credit can be availed on basis of proper and complete specified original duty
paying documents
If assessee is providing both taxable and exempt services and if input
services are common, CENVAT credit can either be taken on proportionate
basis or 6% amount is required to be paid on value of exempted services
Registration
Service provider should register within 30 days from date of commencement of
providing taxable service. Application should be in form ST-1 [Rule 4(1)]. Income
Tax PAN, address proof, evidence of constitution of firm/company, list of
directors/partners are the most important document required.
Application for registration is to be filed electronically. The PAN based registration
number is generated by system immediately. However, registration certificate is
issued by Superintendent in form ST-2 after the documents are submitted.
Registration will be deemed to have been granted if not received within seven days
[Rule 4(5)]
Person providing services from more than one premises or offices can apply for
centralised registration, if he has centralised billing system or centralised
accounting system [Rule 4(2)]
Procedure to be followed
Assessee should prepare invoice in respect of his services. The Invoice should be
prepared within 14 days from date of completion of taxable service or receipt of
payment towards the value of taxable service, whichever is earlier. Invoice should
contain prescribed details [Rule 4A]
If the assessee is an individual or proprietary firm or partnership firm, the tax is
payable on quarterly basis within 5 days at the end of quarter (within 6 days in case
of e-payment) except in March. Service tax is payable by other assessee by 5th of
the month following the month in which payments are received toward value of
taxable services (by 6th in case of e-payment) except in March [rule 6(1) of Service
Tax Rules]
Service tax on value of taxable services received during month of March or quarter
of March is required to be paid by 31st March in case of all the assessee
Import of Services
In case of import of service, tax is payable by recipient of services under
method of reverse charge. Tax should be paid by cash i.e. GAR-7 Challan and
then Cenvat credit can be availed of the tax so paid, as it is his input service
Tax is payable only when service is received in India. Services provided and
used outside India cannot be taxed in India
To determine the issue whether a provision of service is import of service,
services have been classified in three categories. Criteria for each category
has been specified e.g. immovable property India, service performed in India,
recipient is located in India
Some Illustrations of
Tax computation
Case 1: Avana is
Importer and Sells within
State of Delhi
Note:
Buyer will
get the
Cenvat
Credit of
CVD &
Special
CVD as well
as VAT
Credit
Net Cost to
Buyer ( P-OI-F )
1,407,463
Case 2: Avana is
Importer and Sells to
Buyer of UP
Note:
Buyer will
get the
Cenvat
Credit of
CVD &
Special
CVD as VAT
Credit
Net Cost to
Buyer ( P-IF)
14,38,886
Thank You