MAHARASHTRA VALUE ADDED TAX (MVAT)

Nisha Santiago 97Parin Shah 98Preeti Someshwar 99Priyanka Oza 100Raghavendra Nayak 101Rahul West 102

What is VAT First initiated in Brazil

Levied on multiple stages of production

Levied on sale of goods including intangible goods

Substitute for sales tax ie BST 1959

Pre MVAT- Bombay Sales tax Act- 1959

Problem with double taxation

MVAT was introduced in 2005

What type of Businesses are liable Importer Manufacturer Distributors Wholesalers Retailers Work contractors

Features of MVAT

A single law to incorporate laws to sales tax, works contract and transfer of right to use goods

Uniformity in rates of taxes with other states Composition schemes for small businessmen Exemption for Agriculture sales and goods

used in agriculture Tax benefit on stock held on 31.03.2005 Credit for tax paid on purchase on and from

appointed day.

Time bound refund Separate return for different dealers Simple self-assessment Audit Benefits given to exempt unit continued Harsh criminal penalties

Registration under VAT

Existing Dealers Dealers registered under Bombay Sales Tax Act

1959

Dealers under The Maharashtra Sales Tax on Transfer of Right to Use any Goods for any Purpose Act, 1985 and The Maharashtra Sales Tax on Transfer of Property in Goods involved in execution of Works Contract [Re-enacted] Act, 1989

New Dealers Dealers seeking Voluntary registration

Effective Date of registration New Businesses

Existing Businesses

Voluntary Registration

Late Registration

Benefits of registered DealerAs a registered dealer, they are entitled to:

• collect VAT on the sales;

• claim set-off of tax (input tax credit) paid on purchases;

• Issue tax invoices and, be competitive.

Rates of Tax Under MVATTwo main rates i.e 4% & 12.5%.

The goods are grouped into five schedules as under: Schedule Rate of tax Illustrative Items.

A 0% Vegetables, milk, eggs, bread

B 1% Precious metals and precious stones and their jewellery

C 4% Raw materials, notified industrial inputs, notified information technology products and a fewessential items

D 20% and above Liquor, petrol, diesel etc

E 12.5% Other than items specified in schedules A, B, C & D.

Difference between tax free goods and exempt sales

Tax free goods do not attract tax at any stage of sale or in any type of transaction, whereas, exempted sales are certain types of transactions, viz., export sales which are exempt from tax.

Sales exempt under VAT Following sales are exempt under Maharashtra Value Added Tax Act, 2002: •Sales in course of import or export of goods. •Sales in course of inter-state trade or commerce or outside the State/Union Territory. •Turnover of sales below Rs. 5 lacs during a year •Sales exempted by Government in public interest, known as tax free goods. •Works contract executed outside the State.

Special Cases

Auctioneers If dealer is an auctioneer, then they must

include in their turnover, the price of the goods they auction for their principal

Hotels There are special rules for hotels and

other establishments that provide boarding and lodging for an inclusive amount.

Special Cases

Works contracts VAT applies only to the sale of goods.

Supply of services is not liable to VAT. Works contracts are deemed sales where both, goods and services are provided in a transaction and cannot be separated.

A works contract may involve the creation of immoveable property, e.g. a house, a factory or a bridge.

Advantages of VAT

Simplicity Under VAT system, there are only a few tax rates

Adjustment of Tax Adjustment of tax paid on purchased goods Further such adjustment

Transparency The amount of tax would be known at each and

every stage of goods of sale or purchase. Fair & Equitable

There is uniformity in tax rates across the states.

Advantages of VAT

Procedural Simplification Procedural simplification relating to assessment,

appeals, revision and proceedings review Minimizing Discretion

minimized discretion with assessing officers so that similarly placed persons are treated alike

Computerization helps to focus on tax evaders by generating

exception reports management information system

THANK YOU….