Gujarat Value Added Tax Act 6z6t2e
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GUJARAT VALUE ADDED TAX ACT
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GUJARAT VALUE ADDED TAX ACT, 2003 Gujarat Value Added Tax, 2003 (GVAT Act) is made effective in the state of Gujarat from 1st April, 2006. On its implementation following Acts are repealed. • The Gujarat Sales Tax Act, 1969, • The Bombay Sales of Motor Spirit Taxation Act, 1958, • The Purchase Tax on Sugarcane Act, 1989. However provisions relating to pending assessment, appeals, recovery etc., under the above Acts will survive. The basic requirement of charging tax under GVAT Act is that where any sale in the course of business is affected, in the State of Gujarat, VAT is payable under GVAT Act. Transactions made in the course of business only are covered under the GVAT Act. A few important definitions are given herein below. Definition of Business Sec. 2(4) The term “Business” as defined in Section 2(4) means any commercial activity in the nature of purchase, sale or supply, with or without intention to make profit and whether or not profit accrues therefrom. Further, any transaction of buying, selling or supplying plant, machinery, consumable stores, waste products, or such other goods or waste or scrap of any of them which is ancillary or incidental to or resulting from such commercial activity are also covered. Definition of sale Sec. 2(23) Sale means sale of goods within the State of Gujarat for cash or deferred payment or other valuable consideration and includes:
1. transfer otherwise than in pursuance of contract, of property in goods 2. transfer of property in goods involved in execution of Works Contract 3. delivery of goods on hire purchase or any system of payment by installments 4. transfer of right to use any goods for any purpose 5. supply of goods by any unincorporated association or body of persons to a member thereof 6. supply of goods by a society or club or association to its on payment of a price or of fees or subscription or any consideration 7. supply of goods by way of or as part of any service or in any other manner whatsoever 8. supply of goods being food or any other article for human consumption 9. supply by way of barter of goods 10. Disposal of any goods including any unclaimed, confiscated, unserviceable, scrap, surplus, old, obsolete, discarded, waste or surplus product or goods but it does not include mortgage, hypothecation, charge or pledge. It is worth noting that, unlike under GST Act, no separate definition of Specified Sale (for Lease Rent) is in GVAT Act. Therefore, rental incomes of all the goods are taxable as against rental income of only specified commodities under the GST Act. SALE PRICE SEC. 2(24) It is inclusive inter alia of duties under Excise/ Customs Act & also of any such sum, charged for anything done at the time of or before delivery of the goods DEFINITION OF DEALER – S. 2(10) Dealer means any person who for the purpose of, or consequential to his engagements in or, in connection to or in the course of his business buys, sells, manufactures, makes, supplies or distributes goods, directly or indirectly, or otherwise, whether for cash or deferred payment, or for commission, remuneration or otherwise and includes.
1. Central Govt., State Govt., Local Authority, Panchayat, a Statutory Authority, a Company, a Partnership Firm, a HUF 2. A Casual dealer who undertakes occasional transaction of a business in any exhibition-cum-sale or auction 3. An auctioneer who sells or auctions goods belonging to any principal 4. a factor, broker or commission agent, del credere agent or any mercantile agent, who carries on business on behalf of his principal 5. A works contractor 6. Seller of goods on Hire purchase or on installment payment 7. Any person who transfers only right to use any goods 8. Supply of food or drink for human consumption Exceptions —
1. Agriculturist selling his own agricultural produce 2. Charitable, religious or educational institutions carrying on the activity of buying, selling of goods in performance of its functions for achieving its avowed objects which are not in the nature of business 3. Fisherman selling seafood caught by him or his family The scope of dealer is expanded and any remotest transaction in the nature of business or otherwise is sufficient to construe a person as dealer. INCIDENCE AND LEVY OF TAX U/s. 3, a dealer crossing threshold limits of total turnover of Rs. 5,00,000 and taxable turnover of Rs. 10,000 in previous year or current year is liable to pay tax, except for casual dealer whose threshold limit is taxable turnover exceeding Rs. 10,000/-. Further, the dealer incurring liability to pay tax in previous year or in current year under the CST Act, i.e. having effected inter-state sales of taxable goods is also liable to pay tax under GVAT. Besides, dealers who are already ed under GST Act, Bombay Motor Spirit Taxation Act, Purchase Tax on Sugarcane Act or CST Act as on appointed day (i.e., 1-4-2006) are deemed to be ed dealer under S. 23 of the GVAT Act and are liable to pay tax from the appointed day. No dealer who has become liable to pay tax u/s. 3 can do business without having valid registration certificate. SCHEME OF TAXATION UNDER THE GVAT ACT IN BRIEF Taxes payable under GVAT Act, 2003. VAT U/S. 7 Section 7 is a charging section under which tax is levied on sale of goods listed in Schedule II and Schedule III. PURCHASE TAX U/S. 9 Section 9 is another charging section wherein, purchase tax is payable in the following situations.
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Sub-section (1) provides for levy of purchase tax when goods are purchased from uned dealer by a ed dealer at the rates set out against Schedule II or III of the Act. Sub-section (2) provides for levy of purchase tax, where a ed dealer, purchases sugarcane from an uned dealer for use in manufacture of sugar or khandsari. Sub-section (3) provides for levy of purchase tax where any dealer has purchased any taxable goods against a certificate or declaration under any provisions of this Act or earlier law, rules or notification, and the conditions, recitals or undertakings of such certificate or declaration are not complied with, then such person or dealer shall be liable to pay purchase tax on the turnover of such purchases at the rate set out against each of such goods in Schedule II or III or at applicable rate of tax under the earlier law, as the case may be. Sub-section (4) provides for levy of purchase tax where a dealer or a commission agent who is liable to pay tax under this Act, purchases taxable goods from a commission agent to whom permission to pay lump sum tax is granted u/s. 14B and the goods so purchased by him are not resold within the State then such dealer or the commission agent shall be liable to pay purchase tax on the turnover of such purchases at the rate set out against each of such goods in Schedule II. Sub-section (5), inserted w.e.f. 1-4-2008, imposes P.T. on purchase of taxable goods, sales of which is zero rated u/s. 5A if, the goods so purchased are used for prohibited purposes like branch/consignment transfer, fuel for motor vehicle/generation of electricity etc. ADDITIONAL TAX W.E.F. 1-4-2008, Additional tax is levied u/s. 7(1A) on the turnover sales of goods except the following: (a) Gold/silver/precious metal bullion, species, Article and Jewellery [Entry-II (13)] (b) Petrol, Diesel And ATF [Schedule III Goods] (c) Declared Goods As per Section 9(6), Additional Tax is also leviable on turnover of purchases liable to P.T. u/s. 9. The rate of Additional Tax is 1% in case of other goods which are liable to tax @ 4% and is 2.5% in case of other goods which are liable to tax @ 12.5 % or more. The Additional Tax is Vattable and is leviable on sales price excluding VAT. The Additional Tax is not payable on the tax payable under the Lump sum Scheme. RATE OF TAX UNDER THE GVAT ACT, 2003 Schedule I, governed by section 5(1) consist of 54 entries, which are exempt from the levy of tax. First 86 Entries in Schedule II are taxable @ 4% except for the commodities enlisted hereunder which are taxable at specified rates: Entry (13) Gold/Silver @1%, Entry (25) Liquors @ 60%. Entry (46B) Kerosene other than sold under PDS @ 25%, Entry (48A) Lignite @ 20%, Entry (49A) Low Sulphur Heavy Stock (LSHS) @ 15%, Entry (49B) Lubricants @ 15%, Entry (51A) Naphtha @ 16%, 87th Entry is Residuary Entry taxable @ 12.5% (Means those commodities which are not found in Schedule I or Schedule III or in entries 1 to 86 in Schedule II). Schedule III gives specific tax rates for Motor Spirit goods viz, Entry 1 High Speed Diesel Oil @ 24% (Rate reduced to 21% by notification), Entry 2 Aviation Gasoline (Duty Paid) @ 13%, Entry 3 Aviation Gasoline (Bonded) @ 26%, Entry 4 Aviation Turbine Fuel (Duty Paid) @ 30%, Entry 5 Aviation Turbine Fuel (Bonded) @ 38%, Entry 6 Any other type of motor spirit excluding natural gas & LPG @ 26%(Rate reduced to 23% by notification). The above entries are to be read with various notifications issued by the State Government u/s. 5(2) conferring exemption or reduction in the tax rate. ADJUSTMENT IN TAX Section 8 allows adjustments in tax. For determination of Taxable Turnover, following adjustment are provided. (i) Rule 43(2)(a) - Rate Difference - within One Year from date of transaction (ii) Rule 43(2)(b) - Goods Return – within 6 Months from date of transaction (iii) Rule 43(3)(c) - Annual Discounts etc. – within 3 Months from end of year (iv) No time limit for sales cancellation The adjustment is to be made in the tax period of occurrence of event only. Debit/ Credit Notes shall have to be in accordance with provisions of Sec. 8, Sec.60, & Rule 43. Debit/ Credits notes can’t be issued more than once for excess. INPUT TAX CREDIT (ITC) Input Tax Credit is at the core of the scheme of taxation under GVAT Act. Input tax credit is available on the inputs of a dealer in full immediately on receipt of tax invoice. The ITC is available of VAT paid on purchases, purchase tax u/s.9 and Entry Tax. In case of manufacturers, it is the tax paid on purchase of raw material for manufacturing taxable goods. The term raw material includes processing materials, consumable stores and packing material but does not include fuels for the purpose of generation of electricity. For getting ITC, the prime condition is that the goods purchased should be intended for sale within the state or, outside state or, in the course of Inter State trade or commerce or, in the course of export or, for sale to EOU or, to a Unit located in SEZ or, for Branch Transfer or, for sale on consignment basis or, for use as raw material for manufacturing taxable goods or for manufacturing of packing material for such manufactured finished goods. ITC ON CAPITAL GOODS ITC on Capital Goods is also available. Capital Goods mean plant and machinery purchased after 1-4-2006 and which are not second hand. Further, it should not be used for manufacture of Tax free Goods (Other than zero rated sales) or for Electrical Power Generation including Captive Use. Further, the capital good on which ITC has been claimed should be used for a continuous period of 5 years, or else proportionate reduction in ITC is required to be made. Besides, ITC is not issible of VAT on capital goods used in the execution of works contract. ITC ON FUEL AND BRANCH TRANSFER TRANSACTIONS ITC of fuel used in motor vehicles or in generation of electrical energy is not issible. ITC of other Fuel if used in manufacture is available after deduction of 4% of tax paid on purchase of such fuel. Similarly ITC on goods dispatched by way of branch transfer outside the Gujarat State is eligible for ITC after deducting 4% or applicable lower rate of tax on taxable turnover within the State. ITC OF PURCHASE TAX AND ENTRY TAX ITC of Purchase Tax u/s. 9(1), 9(5), & 9(6) is available in the month of liability. ITC of Purchase Tax u/s. 9(2) is available in the tax period in which actual payment of tax is made. Similarly ITC of Tax paid under the Gujarat Tax on Entry of Specified Goods into the Local Areas Act, 2001 is available in the month of liability. ZERO RATED SALES The concept of zero rated sales has been introduced w.e.f. 1-4-2008, for allowing ITC on the purchase related to sale of goods to the Developer or Co-Developer of SEZ or to a Unit carrying on business in the Processing or Demarcated area of SEZ. This benefit is not issible for Schedule III goods i.e. Motor spirit goods. As per Rule 42(2)(2A), the tax invoice in such case shall have to be issued in triplicate. Original invoice is to be given to buyer. Duplicate, duly endorsed by customs authorities is to be returned to the seller. Triplicate is to be retained by the seller. Local sellers shall have to dispatch goods with form 402 duly authenticated by his jurisdictional officer. ADJUSTMENT IN ITC ITC is required to be reversed (fully or partly) when goods are used for non-specified purposes. ITC is also required to be adjusted on receipt of Debit Note or Credit Note for Sales/ Purchase Return/Rejection, or for any change in consideration within prescribed time period.
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ITC NOT ISSIBLE ITC is not issible, inter alia, & in addition to items mentioned above, on the following purchases • Vehicles - Its equipments, accessories and spares (except for vehicle dealers). • For goods or property not connected with business. • For unsold stock at the time of closure of business. • For “Petrol Diesel, crude oil & lignite unless for resale • For purchases from dealer who has opted for lump sum payment u/s. 14. • For Inter-State/import URD/ exempt purchases • For Goods used in manufacture of exempt goods • For Goods which are given for right to use only • If tax invoice is not available or tax is not charged separately • For goods disposed of otherwise than by way of sale resale or manufacture. • For purchases during uned period except for stock on date of Registration as mentioned under the Head “Compulsory Registration”. ITC – HOW TO USE ITC is to be deducted from VAT payable and the net amount of VAT is required to be paid. If ITC is greater than VAT payable, it can be adjusted against CST liability, and balance to be carried forward in next month. Unadjusted ITC shall be refunded within 2 years from the end of the year in which it became issible. ITC for export of goods shall be refunded within 3 months from end of the month in which goods are exported. OPTION OF LUMP SUM PAYMENT OF TAX TO SMALL DEALERS — S. 14 Small Dealers engaged in trading activity and a class of notified manufacturers being Bakery, Bricks manufacturers, having total turnover not exceeding Rs. 50 Lacs in the preceding year can opt to pay lump sum tax on taxable turnover, in lieu of tax u/s. 7, provided the dealer is not engaged in the activities of Inter State Sale or Purchase or, Transfer to Branch/Agent or transfer from branch or agent or, Import or, Export or, Sales/Purchases through Agent or, Works Contract or, Leasing or and Manufacturing activity other than notified manufacturing activity. At present only bakery and bricks manufacturing are notified manufacturing activities. Lump sum Tax Rates notified u/s. 14 are as under Small Traders @ 0.50% of taxable Turnover Bakery @ 2.00% of taxable Turnover Bricks Manufacturer @ 2.00% of taxable Turnover The permission for lump sum payment of tax is valid up to turnover of first Rs. 50.00 lakhs or so far as the ed dealer is not undertaking any of the above prohibited activity. On exceeding turnover of 50 lakhs, or on undertaking prohibited activity, the dealer shall be liable to pay tax under normal provisions of tax. On turnover exceeding the limit or on suo moto opting out of lump sum scheme, the ITC of stock of taxable goods held on the date of liability and which are purchased after 1-4-2008 and are of within 1 year purchases, will be issible on furnishing Form 112 along with the next return due from the date of liability. In addition to lump sum tax at specified rate, the dealer is liable to pay purchase tax under sections 9(1) & 9(3) and Additional Tax u/s. 9(6) also. Further the dealer is not entitled to ITC on his purchases. The dealer cannot issue Tax Invoice nor collect VAT on sales. PROCEDURE FOR APPLICATION FOR LUMP SUM PAYMENT OF TAX Application for the FY 2006-07 was to be filed before 31-5-2006 in Form 210 and permission for the same will be granted if the dealer is not engaged in the activity of Inter State Sale or Purchase, Transfer from/to Branch/Agent, Import, Export, Sales/Purchases through Agent, Works Contract, Leasing and Manufacturing activity other than notified manufacturing activity. The permission is granted in Form 211 within 15 days from the date of application. Application for permission for subsequent year is required to be made before 30th April of the relevant year. Newly ed dealers have to file application within 90 days from the date of registration. W.E.F. 01/04/2008, a dealer who is granted permission to pay Lump Sum Tax need not file fresh application for renewal of permission every year. COMPOSITION OF TAX ON WORKS CONTRACT U/s. 14A Dealers engaged in the execution of works contract can, in lieu of the amount of tax leviable, pay lump sum tax by way of composition as under. 1.
Processing of Polyester Textile Fabrics
0.50%
2.
(i) Works of roads of all kinds including work of paving, mixing, metalling, asphalting and earth work.
0.60%
(ii) Works of building construction including Reinforced Cement Concrete and masonry work but excluding air conditioning, firefighting, interior works and electrical works if its total value exceeds ten per cent of total value of works contract. (iii) Works of cross drainage structure and bridges. (iv) Works of digging and laying of pipelines of all kinds. (v) Works of dams, check dams, weirs, protection walls, canals and head works. (vi) Works of excavation and mining. (vii) Works of construction of jetty, port and break water (viii) Works of construction of airport runwayys and landing strips. (ix) Works of water storage structure including underground and overhead storage tanks. 3.
Other Works Contract
2.00%
In addition to lump sum tax, the dealer is required to pay purchase tax under sections 9(1) & 9(3) and Additional Tax u/s. 9(6) also. Further the dealer is not entitled to ITC on VAT paid on purchases nor can issue Tax Invoice or collect VAT on sales. Prohibition against inter state purchases/ sale etc. as in Sec.14 is applicable here also Procedure — Two Types of works contracts are contemplated under Rule 28. In case of “On Going Works Contract” referred to in Rule 28(8)(bb), application for Lump Sum tax is to be made in Form 214A within 30 days before the commencement of the year and the permission shall be effective from beginning of the year. The dealer who is earlier granted the permission need not file fresh application for renewal. New dealers shall have to file application within 90 days from the date of registration. The permission shall be granted in Form 215A within 15 working days. For other works contractors, the application is to be made for each contract separately in Form No. 214, within 30 days from the beginning of the contract. Permission is granted in Form 215. Such permission is effective from the date of the beginning of
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the contract and is valid till its completion. There is no turnover limit in either case. COMPOSITION OF TAX ON AGRICULTURAL PRODUCE U/S. 14B Commission Agent engaged exclusively in the business of agricultural produce and licensed as general commission agent with a market committee established under the Gujarat Agricultural Produce Markets Act, 1963, can pay, in lieu of the amount of tax leviable, lump sum tax @ 0.05% by way of composition subject to conditions prescribed therein. Further the commission agent is not entitled to ITC on his purchases nor can issue Tax Invoice or collect VAT on sales. Procedure — Application in Form 210A — Permission in Form 211A — permission shall be effective from the tax period subsequent to the month in which application is submitted. Permission is valid as long as the provisions in this respect are complied with. Permission is granted with a condition that agricultural produce shall be sold by the commission agent within 12 months from the date of purchase. COMPOSITION OF TAX ON TURNOVER OF RIGHT TO USE THE GOODS — S. 14C Dealers engaged in transferring right to use any goods (lessor) can pay lump sum tax by way of composition @ 4%. Section 14C(2) provides that permission shall not be granted if the dealer derives hire charges through transaction in the course of inter State trade and commerce or exports, or through branch or agent located outside the Gujarat State. Further the dealer is not entitled to ITC on VAT paid on any types of purchases. Moreover, Tax Invoice cannot be issued nor any VAT can be collected on sales. There is no limit on turnover. PROCEDURE Application is required to be made in Form 210B. Permission is granted in Form 211B. Permission is effective from the tax period subsequent to the month in which application is submitted. Permission shall be valid so long as the provisions in this respect are complied with. COMPOSITION SCHEME ON SALES OF EATABLES BY HOTELS, RESTAURANTS, CATERERS, ETC. — S. 14D S. 14D provides for a scheme to dealers engaged in sale of eatables in any form (whether processed or unprocessed), served, delivered or given in package from the place of business of the dealer or any other place, to pay a lump sum tax by way of composition @ 4% without any turnover limits. For the purpose of this section, the word “eatables” means all kind of foods for the purpose of consumption including all types of beverages, water (mineral, purified or aerated) and soda waters, ice-cream and kulfi, sweets and sweetmeats, fruits and fruit juice, all type of milk preparations, bakery products etc. The dealers engaged in the manufacture of Alcoholic and non-alcoholic beverages including soda water, Aerated, mnineral, purified, medicinal, ionic or demineralized water or water sold in sealed container, Ice cream, kulfi, Biscuit (Branded)shall not be granted permission to pay lump sum tax u/s. 14D Procedure — Application is required to be made in Form 210C within 90 days from the date of registration. In the subsequent years; i.e., from 2007-08 and onwards, application is to be filed within 30 days before the commencement of new financial year. The permission granted is valid so long as the provisions in this respect are complied with. W.E.F. 1-4-2008 the permission once granted need not be renewed every year. The dealer is required to display conspicuously, at each place of his business, a notice with the phrase “Tax is not charged separately”. Section 14D(5) provides that permission shall not be granted to the dealers who purchases eatables or any raw material thereof, in any form (whether processed or unprocessed) in the course of inter State trade or commerce or import such goods from place outside the territory of India, or receives eatables or raw material thereof (whether processed or unprocessed) in any form from his branch situated outside the state or from cong agent outside the state. REGISTRATION OF DEALERS Two types of Registration viz. compulsory and voluntary are contemplated under the Act. COMPULSORY REGISTRATION S. 21 A dealer, liable to pay tax under section 3, has to apply for registration u/s. 21 within 30 days of liability unless deemed to be ed u/s 23 because of registration in erstwhile laws. If so applied within time limit, ITC of stock on date of liability of goods purchased after 1-4-2008 & of 1 year will be issible on furnishing Form 111 along with first return. VOLUNTARY REGISTRATION SECTION 22 Where a dealer having fixed or regular place of business in the state, and who is not required to obtain registration U/s. 21 can apply u/s. 22 for Voluntary Registration at any time. He has to give interest free deposit of Rs. 25,000/- which can be adjusted against tax/ interest/penalty payable by the dealer. REGISTRATION AS TRANSFEREE OF BUSINESS Where any dealer ed under the GVAT Act, 2003 transfers his business in whole or in part, and if the transferee is not a ed dealer under the Act, the later shall get registration under the Act, within 30 days from the date of transfer of business. REGISTRATION AS LEGAL HEIR OF DECEASED DEALER Where any dealer ed under the GVAT Act, 2003 dies and his legal heir continues the business then the registration is required to be obtained within 6 months from the date of transfer of business, if the legal heir is not a ed dealer. PROCEDURE FOR REGISTRATION UNDER GVAT ACT, 2003
1. The dealer has to apply for registration in Form No. 101 to the ing authority having jurisdiction over his chief place of business. Where the dealer has more than one place of business, application is required to be made with the ing authority having jurisdiction over chief place of business. Only one Registration No. is issued for all the places of business within the State. The dealer can choose chief place of business from amongst his all the places. Where the dealer has no fixed place of business within the State (non-localised dealer), application is required to be made to CTO Ahmedabad. 2. In case of compulsory registration, if the application is within prescribed time limit of 30 days, the dealer shall get registration from the date, he became liable to pay tax. In case of belated application, registration shall be effective from the date of application. In case of voluntary registration, it shall be effective from the date of application. 3. The following information are required to be furnished to the ing authority in Form No. 101 (a) Full Name, Address, Date of Birth, PAN, IEC Code No, Central Excise Registration No, Electrical Energy Supply Service No, Enrolment and Registration Certificate Nos. under Gujarat Professional Tax Act and Registration Certificate No. under CST Act, if any, Telephone No, Fax No, Email-id and web-site if any, status of business, nature of business activities, name of the commodities relating to business, details of bank s duly certified by the banker along with date on which threshold turnover limit is crossed are to be stated in the application form. (b) Annexure in Form 101A is to be furnished showing details of additional place of business in the State of Gujarat. (c) Annexure in Form 101B is to be furnished showing addresses of branches or godown located outside Gujarat State. (d) Annexure in Form 101C is to be furnished wherein specimen signature of authorized person is to be furnished. (e) Annexure in Form 101D is to be furnished wherein details of partners/directors/person responsible are to be furnished. (f) Annexure in Form 101E is to be furnished wherein details of Licensed Capacity, Installed Capacity, Production, No. of persons employed, Electricity Consumer No., Annual consumption of Electricity etc., are to be furnished.
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(g) Form No. 106, a declaration of in respect of manager of the business DOCUMENTS TO BE ATTACHED WITH APPLICATION IN FORM NO. 101 Following Documents duly attested by STP/Advocate/Gazetted Officers are required to be furnished along with Application for Registration in Form 101. (a) Two photographs of proprietor, karta, each partner of the firm or, each director of the company (except for nominee directors of State or Central Govt. organization) as the case may be. (b) Documents relating to ownership proof of place(s) of business in the State of Gujarat. (c) Documents relating to residence of proprietor, karta, each partner of the firm or, each director of the company (except for nominee directors of State or Central Govt. organization) as the case may be. FURNISHING OF SECURITY A dealer furnishing any three of the following documents shall pay security of Rs. 10,000/-. (a) last paid electricity bill in his name or his parent’s name or his spouse’s name (b) last paid telephone bill in his name or his parent’s name or his spouse’s name (c) PAN issued under IT Act, 1961 (d) any document as proof of ownership of principal place of business in his name or his parent’s name or his spouse’s name. (e) any document as proof of ownership of residential property or any immovable property in his name or his parent’s name or his spouse’s name (f) notarized photocopy of the port of proprietor, managing partner or managing director (g) Shop and Establishment Certificate (h) Registration Certificate obtained from Customs and Central Excise Authority. Where the applicant cannot furnish any three of the above documents, the security amount shall not exceed Rs. 50,000/-. The security can be furnished in the form of bond executed in Form 105, or Furnishing of NSC, or Bank Guarantee. TAX INVOICE Under the GVAT Act, two types of invoices are prescribed. Only a ed Dealer who has not opted for composition scheme can issue Tax Invoice for taxable goods only and that too, if the purchaser is a ed dealer having TIN. Tax credit is available only against Tax Invoice. Tax Invoice is required to be issued in duplicate, serially and mechanically numbered and the words “Tax Invoice” be printed on Invoice. Tax Invoice must contain prescribed details as per Rule 42 including the tax amount separately. For transfer of ITC from Principal to Agent and vice versa, Tax Invoice is required to be issued. RETAIL INVOICE Retail Invoice should be issued in duplicate, serially and mechanically numbered where sale price exceeds Rs. 100. Words “Retail Invoice” must be printed on the invoice. Invoice must contain prescribed details vide Rule 42. For sale of exempt goods, inter state sale and for sale to uned dealer retail invoices is to be prepared. Tax need not be charged separately if rate of tax is mentioned. FILING OF RETURN The returns are to be filed as under: HALF YEARLY RETURNS Co-operative Societies engaged in the manufacture of sugar or khandsari have to submit half yearly return in Form 201. QUARTERLY RETURNS Dealers opting for lump sum excepting normal works contractors (other than “On Going Works Contractor”) having tax liability exceeding Rs.60000, local traders and dealers other than those mentioned in monthly category, having tax liability of less than Rs.60000 have to file quarterly returns as under: Dealers holding lump sum tax permission u/s.14, 14A r.w. Rule 28(8)(bb), 14C and 14D
Form 202 and 202A
Dealers holding lump sum tax permission u/s.14B
Form 202, 202B and 202C
Normal Works Contractor
Form 201, 201A & 201B
Local Traders& others
Form 201, 201A & 201B.
Form 201C Half Yearly MONTHLY RETURN Following dealers are liable to file monthly returns in Form 201, Form 201A (Tax invoice sale ), Form 201B (Tax invoice purchase ). They have also to submit Form 201C (Details of Stock movement) quarterly. Importer, Exporter, SEZ Unit/Developer, Refundees u/s.40, remission u/s.41, dealers of Schedule III goods, dealers enjoying exemption/deferment and dealers having tax liability exceeding Rs.60000 in preceding year or current year excepting local traders and lump sum dealers other than dealers opting for lump sum for normal works contract under Rule 28(8)(a) having tax liability of less than Rs.60000. ADDITIONAL FORMS In case of following dealers, Additional Forms as under are also to be submitted: Dealer of Schedule III Goods Form 212 & Form 213 Dealer enjoying exemption Form 203 Dealer enjoying Deferment Form 204 Works Contractors Form 216 REVISE RETURN Return can be revised within one month from the expiry of the last date prescribed for original return. The differential tax is to be paid with interest. ANNUAL RETURN – SELF ASSESSMENT Every ed Dealer shall furnish Annual Return by way of Self Assessment by 30th June after the end of the financial year in following Form: (a) All Lump sum dealers excluding normal works
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contractor (b) All other dealers including normal Works Form 205 & 205A Contractor (other than “On Going Works Contractor”) In addition, Form 202A in case of (a) and Form 201A, 201B & 201C in case of (b) will have to submitted if there is a change as compared to the figures submitted earlier. W.e.f. 1-8-2009, Dealers liable for VAT Audit can submit Annual Return within 9 Months from end of the Year. E-FILING OF RETURNS E-Filing of returns is mandatory for Dealers having turnover exceeding Rs.1 Crore or making zero rated sale or Enjoying Exemption/Deferment, Importers, Exporters, Developer/Co-Developer of SEZ or Dealer carrying on business in processing area/demarcated area of SEZ. Such dealers shall have to file CST return also online along with Appendix I & II. E-filing dealers are exempted from filing hard copies of form 201, 201-A, 201-B & 201-C on submission of bar coded receipt to Dept. All dealers requiring ‘C’, ‘F’, ‘H’ forms shall have to e-file return along with Appendix I & II as system of issuing such forms in advance has been discontinued. E-filing of Annual s containing Trading , Profit & Loss A/c and Balance Sheet is mandatory for a dealer having total turnover exceeding Rs.1 Crore only. TIME LIMIT FOR FILING OF RETURN Monthly and quarterly returns are to be filed within 30 days from the end of the month or quarter as the case may be to which the return relates. Whereas Annual return is to be filed within three months from the end of the year to which the annual return relates. W.e.f. 1-8-2009, Dealers liable for VAT Audit can submit Annual Return within 9 Months from end of the Year. PAYMENT OF TAX Payment of tax is to be made on within 22 days from the end of the month/ quarter to which the return relates. Incase of dealers of Schedule III goods the tax payment is to be made within 12 days. Where the payment is made by cheque, date of clearing of cheque will be treated as date of payment. Tax is to be paid in Form 207 (Challan) in Govt. Treasury where chief place of business of dealer is situated. The dealers having tax paid/ payable exceeding Rs. 10 Lacs shall have to make E-payment. AUDIT UNDER GVAT As per Section 63, a dealer having turnover exceeding Rs. 1 Crore and (As per Press Release) Taxable Turnover exceeding Rs.20 Lacs is liable to get his s audited within 6 months from the end of the year and submit the same within 1 month of the date of the Audit Report. W.e.f. 1-8-2009, Dealers have to obtain Audit Report within 9 Months from end of the Year. FORMS FOR CARRIAGE OF GOODS Goods going outside the State must be accompanied by Form 402. Similarly, goods coming into the State must be accompanied by Form 403. Incase of Specified goods as mentioned below, the Form 402/403, duly authenticated by the concerned authority in advance is to be used. These forms will have to be got signed & sealed by officers at check post. Specified goods for Form 402 : Edible Oil, Oil Seeds, Oil Cakes, Iron and Steel, Ferrous and non-ferrous metals and scrap, Ceramic Products, Cumin Seeds(Jeera), Ani Seeds (Variali), Psyllium Seeds and Psyllium husk (Isabgul and Isabgul husk), Brass Parts, Processed Tobacco, All products of Tobacco including Bidi, Cigarettes, Gutkha, Scented Tobacco, Chhikni, but excluding un-manufactured tobacco, zero-rated sale to SEZ. Specified goods for Form 403 Motor Vehicles, Cement, Marble, Granite, Kota stones, Naphtha, Light Diesel Oil, High Speed Diesel Oil, Iron and Steel, Plywood, Block Boards, Boards, Decorative and Laminated Sheets, Tea in Leaf/Powder Form, Battery operated vehicles, Processed Tobacco, All products of Tobacco including Bidi, Cigarettes, Gutkha, Scented Tobacco, Chhikni but excluding un manufactured tobacco, and Yarn excepting Nylon Yarn, Polyester Viscose Yarn and Cotton Yarn. For Movement of oil cakes and edible oil including refined edible oil even within the State, a duly authenticated Form 402 was made mandatory w.e.f. 5-12-2006. The same is now postponed w.e.f. 7-5-2007. TAX DEDUCTION AT SOURCE Any Person responsible for paying amount exceeding Rs.1 Crore to the contractor or sub-contractor is liable to deduct Tax at Source at the rates of composition mentioned hereinabove. The deductor has to issue certificate of TDS in Form 703 with tax paid challan in original to contractee and file a return of the same in Form 704 by 30th June after the end of the financial year. Out of the gross payment, the amount liable for deduction is to be arrived at by deducting labour charges, price of interstate/import purchases as per declaration given by the contractor/sub-contractor in Form 702. w.e.f. 1-8-2009, every person liable to make TDS should apply for Tax Deduction Number (TDN) within prescribed time in prescribed form. TDN should be quoted on all prescribed documents etc. NOTIFICATIONS FOR CERTAIN ITEMS Notifications have been issued for following items to clarify the coverage thereof. 1. Items of Charkha and other Implements 2. Items of Farsan 3. Handicraft Articles 4. Items of Khadi Garments or Made ups there of 5. Medical Equipments, Devices and Implants 6. Industrial Inputs 7. Agriculture Inputs 8. Kirana Items 9. Packing Materials 10. Information Technology Products 11. Works Contracts
THE GUJARAT TAX ON ENTRY OF SPECIFIED GOODS INTO LOCAL AREAS ACT, 2001 Entry Tax is payable on following goods as under:
Sr. No. Specified Goods
Schedule rate (Maximum) Actually Applicable rate of Tax
1
Motor vehicles including chassis of motor vehicles and the body which is built on chassis of motor vehicles Twenty per cent
Fifteen per cent
2
Cement
Twenty per cent
Fifteen per cent
3
Marbles or Granite (raw or polished)
Twenty per cent
Fifteen per cent
4
Kota stones
Twenty per cent
Fifteen per cent
5
Naphtha
Twenty per cent
Eighteen and a half per cent.
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6
Light Diesel Oil
Twenty per cent
7
High Speed Diesel Oil
Twenty-Five per cent
Fifteen per cent Twenty four per cent
8
Yarn of all types except Nylon Yarn, Polyester Viscose Yarn and Cotton Yarn
Twenty per cent
Five per cent
Vide Notification Dt. 1-4-2006, Exemption from Entry Tax is granted to a dealer ed under the GVAT Act, who brings marble, granite or kota stones into local area from any place outside the states.
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GUJARAT VALUE ADDED TAX ACT, 2003 Gujarat Value Added Tax, 2003 (GVAT Act) is made effective in the state of Gujarat from 1st April, 2006. On its implementation following Acts are repealed. • The Gujarat Sales Tax Act, 1969, • The Bombay Sales of Motor Spirit Taxation Act, 1958, • The Purchase Tax on Sugarcane Act, 1989. However provisions relating to pending assessment, appeals, recovery etc., under the above Acts will survive. The basic requirement of charging tax under GVAT Act is that where any sale in the course of business is affected, in the State of Gujarat, VAT is payable under GVAT Act. Transactions made in the course of business only are covered under the GVAT Act. A few important definitions are given herein below. Definition of Business Sec. 2(4) The term “Business” as defined in Section 2(4) means any commercial activity in the nature of purchase, sale or supply, with or without intention to make profit and whether or not profit accrues therefrom. Further, any transaction of buying, selling or supplying plant, machinery, consumable stores, waste products, or such other goods or waste or scrap of any of them which is ancillary or incidental to or resulting from such commercial activity are also covered. Definition of sale Sec. 2(23) Sale means sale of goods within the State of Gujarat for cash or deferred payment or other valuable consideration and includes:
1. transfer otherwise than in pursuance of contract, of property in goods 2. transfer of property in goods involved in execution of Works Contract 3. delivery of goods on hire purchase or any system of payment by installments 4. transfer of right to use any goods for any purpose 5. supply of goods by any unincorporated association or body of persons to a member thereof 6. supply of goods by a society or club or association to its on payment of a price or of fees or subscription or any consideration 7. supply of goods by way of or as part of any service or in any other manner whatsoever 8. supply of goods being food or any other article for human consumption 9. supply by way of barter of goods 10. Disposal of any goods including any unclaimed, confiscated, unserviceable, scrap, surplus, old, obsolete, discarded, waste or surplus product or goods but it does not include mortgage, hypothecation, charge or pledge. It is worth noting that, unlike under GST Act, no separate definition of Specified Sale (for Lease Rent) is in GVAT Act. Therefore, rental incomes of all the goods are taxable as against rental income of only specified commodities under the GST Act. SALE PRICE SEC. 2(24) It is inclusive inter alia of duties under Excise/ Customs Act & also of any such sum, charged for anything done at the time of or before delivery of the goods DEFINITION OF DEALER – S. 2(10) Dealer means any person who for the purpose of, or consequential to his engagements in or, in connection to or in the course of his business buys, sells, manufactures, makes, supplies or distributes goods, directly or indirectly, or otherwise, whether for cash or deferred payment, or for commission, remuneration or otherwise and includes.
1. Central Govt., State Govt., Local Authority, Panchayat, a Statutory Authority, a Company, a Partnership Firm, a HUF 2. A Casual dealer who undertakes occasional transaction of a business in any exhibition-cum-sale or auction 3. An auctioneer who sells or auctions goods belonging to any principal 4. a factor, broker or commission agent, del credere agent or any mercantile agent, who carries on business on behalf of his principal 5. A works contractor 6. Seller of goods on Hire purchase or on installment payment 7. Any person who transfers only right to use any goods 8. Supply of food or drink for human consumption Exceptions —
1. Agriculturist selling his own agricultural produce 2. Charitable, religious or educational institutions carrying on the activity of buying, selling of goods in performance of its functions for achieving its avowed objects which are not in the nature of business 3. Fisherman selling seafood caught by him or his family The scope of dealer is expanded and any remotest transaction in the nature of business or otherwise is sufficient to construe a person as dealer. INCIDENCE AND LEVY OF TAX U/s. 3, a dealer crossing threshold limits of total turnover of Rs. 5,00,000 and taxable turnover of Rs. 10,000 in previous year or current year is liable to pay tax, except for casual dealer whose threshold limit is taxable turnover exceeding Rs. 10,000/-. Further, the dealer incurring liability to pay tax in previous year or in current year under the CST Act, i.e. having effected inter-state sales of taxable goods is also liable to pay tax under GVAT. Besides, dealers who are already ed under GST Act, Bombay Motor Spirit Taxation Act, Purchase Tax on Sugarcane Act or CST Act as on appointed day (i.e., 1-4-2006) are deemed to be ed dealer under S. 23 of the GVAT Act and are liable to pay tax from the appointed day. No dealer who has become liable to pay tax u/s. 3 can do business without having valid registration certificate. SCHEME OF TAXATION UNDER THE GVAT ACT IN BRIEF Taxes payable under GVAT Act, 2003. VAT U/S. 7 Section 7 is a charging section under which tax is levied on sale of goods listed in Schedule II and Schedule III. PURCHASE TAX U/S. 9 Section 9 is another charging section wherein, purchase tax is payable in the following situations.
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Sub-section (1) provides for levy of purchase tax when goods are purchased from uned dealer by a ed dealer at the rates set out against Schedule II or III of the Act. Sub-section (2) provides for levy of purchase tax, where a ed dealer, purchases sugarcane from an uned dealer for use in manufacture of sugar or khandsari. Sub-section (3) provides for levy of purchase tax where any dealer has purchased any taxable goods against a certificate or declaration under any provisions of this Act or earlier law, rules or notification, and the conditions, recitals or undertakings of such certificate or declaration are not complied with, then such person or dealer shall be liable to pay purchase tax on the turnover of such purchases at the rate set out against each of such goods in Schedule II or III or at applicable rate of tax under the earlier law, as the case may be. Sub-section (4) provides for levy of purchase tax where a dealer or a commission agent who is liable to pay tax under this Act, purchases taxable goods from a commission agent to whom permission to pay lump sum tax is granted u/s. 14B and the goods so purchased by him are not resold within the State then such dealer or the commission agent shall be liable to pay purchase tax on the turnover of such purchases at the rate set out against each of such goods in Schedule II. Sub-section (5), inserted w.e.f. 1-4-2008, imposes P.T. on purchase of taxable goods, sales of which is zero rated u/s. 5A if, the goods so purchased are used for prohibited purposes like branch/consignment transfer, fuel for motor vehicle/generation of electricity etc. ADDITIONAL TAX W.E.F. 1-4-2008, Additional tax is levied u/s. 7(1A) on the turnover sales of goods except the following: (a) Gold/silver/precious metal bullion, species, Article and Jewellery [Entry-II (13)] (b) Petrol, Diesel And ATF [Schedule III Goods] (c) Declared Goods As per Section 9(6), Additional Tax is also leviable on turnover of purchases liable to P.T. u/s. 9. The rate of Additional Tax is 1% in case of other goods which are liable to tax @ 4% and is 2.5% in case of other goods which are liable to tax @ 12.5 % or more. The Additional Tax is Vattable and is leviable on sales price excluding VAT. The Additional Tax is not payable on the tax payable under the Lump sum Scheme. RATE OF TAX UNDER THE GVAT ACT, 2003 Schedule I, governed by section 5(1) consist of 54 entries, which are exempt from the levy of tax. First 86 Entries in Schedule II are taxable @ 4% except for the commodities enlisted hereunder which are taxable at specified rates: Entry (13) Gold/Silver @1%, Entry (25) Liquors @ 60%. Entry (46B) Kerosene other than sold under PDS @ 25%, Entry (48A) Lignite @ 20%, Entry (49A) Low Sulphur Heavy Stock (LSHS) @ 15%, Entry (49B) Lubricants @ 15%, Entry (51A) Naphtha @ 16%, 87th Entry is Residuary Entry taxable @ 12.5% (Means those commodities which are not found in Schedule I or Schedule III or in entries 1 to 86 in Schedule II). Schedule III gives specific tax rates for Motor Spirit goods viz, Entry 1 High Speed Diesel Oil @ 24% (Rate reduced to 21% by notification), Entry 2 Aviation Gasoline (Duty Paid) @ 13%, Entry 3 Aviation Gasoline (Bonded) @ 26%, Entry 4 Aviation Turbine Fuel (Duty Paid) @ 30%, Entry 5 Aviation Turbine Fuel (Bonded) @ 38%, Entry 6 Any other type of motor spirit excluding natural gas & LPG @ 26%(Rate reduced to 23% by notification). The above entries are to be read with various notifications issued by the State Government u/s. 5(2) conferring exemption or reduction in the tax rate. ADJUSTMENT IN TAX Section 8 allows adjustments in tax. For determination of Taxable Turnover, following adjustment are provided. (i) Rule 43(2)(a) - Rate Difference - within One Year from date of transaction (ii) Rule 43(2)(b) - Goods Return – within 6 Months from date of transaction (iii) Rule 43(3)(c) - Annual Discounts etc. – within 3 Months from end of year (iv) No time limit for sales cancellation The adjustment is to be made in the tax period of occurrence of event only. Debit/ Credit Notes shall have to be in accordance with provisions of Sec. 8, Sec.60, & Rule 43. Debit/ Credits notes can’t be issued more than once for excess. INPUT TAX CREDIT (ITC) Input Tax Credit is at the core of the scheme of taxation under GVAT Act. Input tax credit is available on the inputs of a dealer in full immediately on receipt of tax invoice. The ITC is available of VAT paid on purchases, purchase tax u/s.9 and Entry Tax. In case of manufacturers, it is the tax paid on purchase of raw material for manufacturing taxable goods. The term raw material includes processing materials, consumable stores and packing material but does not include fuels for the purpose of generation of electricity. For getting ITC, the prime condition is that the goods purchased should be intended for sale within the state or, outside state or, in the course of Inter State trade or commerce or, in the course of export or, for sale to EOU or, to a Unit located in SEZ or, for Branch Transfer or, for sale on consignment basis or, for use as raw material for manufacturing taxable goods or for manufacturing of packing material for such manufactured finished goods. ITC ON CAPITAL GOODS ITC on Capital Goods is also available. Capital Goods mean plant and machinery purchased after 1-4-2006 and which are not second hand. Further, it should not be used for manufacture of Tax free Goods (Other than zero rated sales) or for Electrical Power Generation including Captive Use. Further, the capital good on which ITC has been claimed should be used for a continuous period of 5 years, or else proportionate reduction in ITC is required to be made. Besides, ITC is not issible of VAT on capital goods used in the execution of works contract. ITC ON FUEL AND BRANCH TRANSFER TRANSACTIONS ITC of fuel used in motor vehicles or in generation of electrical energy is not issible. ITC of other Fuel if used in manufacture is available after deduction of 4% of tax paid on purchase of such fuel. Similarly ITC on goods dispatched by way of branch transfer outside the Gujarat State is eligible for ITC after deducting 4% or applicable lower rate of tax on taxable turnover within the State. ITC OF PURCHASE TAX AND ENTRY TAX ITC of Purchase Tax u/s. 9(1), 9(5), & 9(6) is available in the month of liability. ITC of Purchase Tax u/s. 9(2) is available in the tax period in which actual payment of tax is made. Similarly ITC of Tax paid under the Gujarat Tax on Entry of Specified Goods into the Local Areas Act, 2001 is available in the month of liability. ZERO RATED SALES The concept of zero rated sales has been introduced w.e.f. 1-4-2008, for allowing ITC on the purchase related to sale of goods to the Developer or Co-Developer of SEZ or to a Unit carrying on business in the Processing or Demarcated area of SEZ. This benefit is not issible for Schedule III goods i.e. Motor spirit goods. As per Rule 42(2)(2A), the tax invoice in such case shall have to be issued in triplicate. Original invoice is to be given to buyer. Duplicate, duly endorsed by customs authorities is to be returned to the seller. Triplicate is to be retained by the seller. Local sellers shall have to dispatch goods with form 402 duly authenticated by his jurisdictional officer. ADJUSTMENT IN ITC ITC is required to be reversed (fully or partly) when goods are used for non-specified purposes. ITC is also required to be adjusted on receipt of Debit Note or Credit Note for Sales/ Purchase Return/Rejection, or for any change in consideration within prescribed time period.
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ITC NOT ISSIBLE ITC is not issible, inter alia, & in addition to items mentioned above, on the following purchases • Vehicles - Its equipments, accessories and spares (except for vehicle dealers). • For goods or property not connected with business. • For unsold stock at the time of closure of business. • For “Petrol Diesel, crude oil & lignite unless for resale • For purchases from dealer who has opted for lump sum payment u/s. 14. • For Inter-State/import URD/ exempt purchases • For Goods used in manufacture of exempt goods • For Goods which are given for right to use only • If tax invoice is not available or tax is not charged separately • For goods disposed of otherwise than by way of sale resale or manufacture. • For purchases during uned period except for stock on date of Registration as mentioned under the Head “Compulsory Registration”. ITC – HOW TO USE ITC is to be deducted from VAT payable and the net amount of VAT is required to be paid. If ITC is greater than VAT payable, it can be adjusted against CST liability, and balance to be carried forward in next month. Unadjusted ITC shall be refunded within 2 years from the end of the year in which it became issible. ITC for export of goods shall be refunded within 3 months from end of the month in which goods are exported. OPTION OF LUMP SUM PAYMENT OF TAX TO SMALL DEALERS — S. 14 Small Dealers engaged in trading activity and a class of notified manufacturers being Bakery, Bricks manufacturers, having total turnover not exceeding Rs. 50 Lacs in the preceding year can opt to pay lump sum tax on taxable turnover, in lieu of tax u/s. 7, provided the dealer is not engaged in the activities of Inter State Sale or Purchase or, Transfer to Branch/Agent or transfer from branch or agent or, Import or, Export or, Sales/Purchases through Agent or, Works Contract or, Leasing or and Manufacturing activity other than notified manufacturing activity. At present only bakery and bricks manufacturing are notified manufacturing activities. Lump sum Tax Rates notified u/s. 14 are as under Small Traders @ 0.50% of taxable Turnover Bakery @ 2.00% of taxable Turnover Bricks Manufacturer @ 2.00% of taxable Turnover The permission for lump sum payment of tax is valid up to turnover of first Rs. 50.00 lakhs or so far as the ed dealer is not undertaking any of the above prohibited activity. On exceeding turnover of 50 lakhs, or on undertaking prohibited activity, the dealer shall be liable to pay tax under normal provisions of tax. On turnover exceeding the limit or on suo moto opting out of lump sum scheme, the ITC of stock of taxable goods held on the date of liability and which are purchased after 1-4-2008 and are of within 1 year purchases, will be issible on furnishing Form 112 along with the next return due from the date of liability. In addition to lump sum tax at specified rate, the dealer is liable to pay purchase tax under sections 9(1) & 9(3) and Additional Tax u/s. 9(6) also. Further the dealer is not entitled to ITC on his purchases. The dealer cannot issue Tax Invoice nor collect VAT on sales. PROCEDURE FOR APPLICATION FOR LUMP SUM PAYMENT OF TAX Application for the FY 2006-07 was to be filed before 31-5-2006 in Form 210 and permission for the same will be granted if the dealer is not engaged in the activity of Inter State Sale or Purchase, Transfer from/to Branch/Agent, Import, Export, Sales/Purchases through Agent, Works Contract, Leasing and Manufacturing activity other than notified manufacturing activity. The permission is granted in Form 211 within 15 days from the date of application. Application for permission for subsequent year is required to be made before 30th April of the relevant year. Newly ed dealers have to file application within 90 days from the date of registration. W.E.F. 01/04/2008, a dealer who is granted permission to pay Lump Sum Tax need not file fresh application for renewal of permission every year. COMPOSITION OF TAX ON WORKS CONTRACT U/s. 14A Dealers engaged in the execution of works contract can, in lieu of the amount of tax leviable, pay lump sum tax by way of composition as under. 1.
Processing of Polyester Textile Fabrics
0.50%
2.
(i) Works of roads of all kinds including work of paving, mixing, metalling, asphalting and earth work.
0.60%
(ii) Works of building construction including Reinforced Cement Concrete and masonry work but excluding air conditioning, firefighting, interior works and electrical works if its total value exceeds ten per cent of total value of works contract. (iii) Works of cross drainage structure and bridges. (iv) Works of digging and laying of pipelines of all kinds. (v) Works of dams, check dams, weirs, protection walls, canals and head works. (vi) Works of excavation and mining. (vii) Works of construction of jetty, port and break water (viii) Works of construction of airport runwayys and landing strips. (ix) Works of water storage structure including underground and overhead storage tanks. 3.
Other Works Contract
2.00%
In addition to lump sum tax, the dealer is required to pay purchase tax under sections 9(1) & 9(3) and Additional Tax u/s. 9(6) also. Further the dealer is not entitled to ITC on VAT paid on purchases nor can issue Tax Invoice or collect VAT on sales. Prohibition against inter state purchases/ sale etc. as in Sec.14 is applicable here also Procedure — Two Types of works contracts are contemplated under Rule 28. In case of “On Going Works Contract” referred to in Rule 28(8)(bb), application for Lump Sum tax is to be made in Form 214A within 30 days before the commencement of the year and the permission shall be effective from beginning of the year. The dealer who is earlier granted the permission need not file fresh application for renewal. New dealers shall have to file application within 90 days from the date of registration. The permission shall be granted in Form 215A within 15 working days. For other works contractors, the application is to be made for each contract separately in Form No. 214, within 30 days from the beginning of the contract. Permission is granted in Form 215. Such permission is effective from the date of the beginning of
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the contract and is valid till its completion. There is no turnover limit in either case. COMPOSITION OF TAX ON AGRICULTURAL PRODUCE U/S. 14B Commission Agent engaged exclusively in the business of agricultural produce and licensed as general commission agent with a market committee established under the Gujarat Agricultural Produce Markets Act, 1963, can pay, in lieu of the amount of tax leviable, lump sum tax @ 0.05% by way of composition subject to conditions prescribed therein. Further the commission agent is not entitled to ITC on his purchases nor can issue Tax Invoice or collect VAT on sales. Procedure — Application in Form 210A — Permission in Form 211A — permission shall be effective from the tax period subsequent to the month in which application is submitted. Permission is valid as long as the provisions in this respect are complied with. Permission is granted with a condition that agricultural produce shall be sold by the commission agent within 12 months from the date of purchase. COMPOSITION OF TAX ON TURNOVER OF RIGHT TO USE THE GOODS — S. 14C Dealers engaged in transferring right to use any goods (lessor) can pay lump sum tax by way of composition @ 4%. Section 14C(2) provides that permission shall not be granted if the dealer derives hire charges through transaction in the course of inter State trade and commerce or exports, or through branch or agent located outside the Gujarat State. Further the dealer is not entitled to ITC on VAT paid on any types of purchases. Moreover, Tax Invoice cannot be issued nor any VAT can be collected on sales. There is no limit on turnover. PROCEDURE Application is required to be made in Form 210B. Permission is granted in Form 211B. Permission is effective from the tax period subsequent to the month in which application is submitted. Permission shall be valid so long as the provisions in this respect are complied with. COMPOSITION SCHEME ON SALES OF EATABLES BY HOTELS, RESTAURANTS, CATERERS, ETC. — S. 14D S. 14D provides for a scheme to dealers engaged in sale of eatables in any form (whether processed or unprocessed), served, delivered or given in package from the place of business of the dealer or any other place, to pay a lump sum tax by way of composition @ 4% without any turnover limits. For the purpose of this section, the word “eatables” means all kind of foods for the purpose of consumption including all types of beverages, water (mineral, purified or aerated) and soda waters, ice-cream and kulfi, sweets and sweetmeats, fruits and fruit juice, all type of milk preparations, bakery products etc. The dealers engaged in the manufacture of Alcoholic and non-alcoholic beverages including soda water, Aerated, mnineral, purified, medicinal, ionic or demineralized water or water sold in sealed container, Ice cream, kulfi, Biscuit (Branded)shall not be granted permission to pay lump sum tax u/s. 14D Procedure — Application is required to be made in Form 210C within 90 days from the date of registration. In the subsequent years; i.e., from 2007-08 and onwards, application is to be filed within 30 days before the commencement of new financial year. The permission granted is valid so long as the provisions in this respect are complied with. W.E.F. 1-4-2008 the permission once granted need not be renewed every year. The dealer is required to display conspicuously, at each place of his business, a notice with the phrase “Tax is not charged separately”. Section 14D(5) provides that permission shall not be granted to the dealers who purchases eatables or any raw material thereof, in any form (whether processed or unprocessed) in the course of inter State trade or commerce or import such goods from place outside the territory of India, or receives eatables or raw material thereof (whether processed or unprocessed) in any form from his branch situated outside the state or from cong agent outside the state. REGISTRATION OF DEALERS Two types of Registration viz. compulsory and voluntary are contemplated under the Act. COMPULSORY REGISTRATION S. 21 A dealer, liable to pay tax under section 3, has to apply for registration u/s. 21 within 30 days of liability unless deemed to be ed u/s 23 because of registration in erstwhile laws. If so applied within time limit, ITC of stock on date of liability of goods purchased after 1-4-2008 & of 1 year will be issible on furnishing Form 111 along with first return. VOLUNTARY REGISTRATION SECTION 22 Where a dealer having fixed or regular place of business in the state, and who is not required to obtain registration U/s. 21 can apply u/s. 22 for Voluntary Registration at any time. He has to give interest free deposit of Rs. 25,000/- which can be adjusted against tax/ interest/penalty payable by the dealer. REGISTRATION AS TRANSFEREE OF BUSINESS Where any dealer ed under the GVAT Act, 2003 transfers his business in whole or in part, and if the transferee is not a ed dealer under the Act, the later shall get registration under the Act, within 30 days from the date of transfer of business. REGISTRATION AS LEGAL HEIR OF DECEASED DEALER Where any dealer ed under the GVAT Act, 2003 dies and his legal heir continues the business then the registration is required to be obtained within 6 months from the date of transfer of business, if the legal heir is not a ed dealer. PROCEDURE FOR REGISTRATION UNDER GVAT ACT, 2003
1. The dealer has to apply for registration in Form No. 101 to the ing authority having jurisdiction over his chief place of business. Where the dealer has more than one place of business, application is required to be made with the ing authority having jurisdiction over chief place of business. Only one Registration No. is issued for all the places of business within the State. The dealer can choose chief place of business from amongst his all the places. Where the dealer has no fixed place of business within the State (non-localised dealer), application is required to be made to CTO Ahmedabad. 2. In case of compulsory registration, if the application is within prescribed time limit of 30 days, the dealer shall get registration from the date, he became liable to pay tax. In case of belated application, registration shall be effective from the date of application. In case of voluntary registration, it shall be effective from the date of application. 3. The following information are required to be furnished to the ing authority in Form No. 101 (a) Full Name, Address, Date of Birth, PAN, IEC Code No, Central Excise Registration No, Electrical Energy Supply Service No, Enrolment and Registration Certificate Nos. under Gujarat Professional Tax Act and Registration Certificate No. under CST Act, if any, Telephone No, Fax No, Email-id and web-site if any, status of business, nature of business activities, name of the commodities relating to business, details of bank s duly certified by the banker along with date on which threshold turnover limit is crossed are to be stated in the application form. (b) Annexure in Form 101A is to be furnished showing details of additional place of business in the State of Gujarat. (c) Annexure in Form 101B is to be furnished showing addresses of branches or godown located outside Gujarat State. (d) Annexure in Form 101C is to be furnished wherein specimen signature of authorized person is to be furnished. (e) Annexure in Form 101D is to be furnished wherein details of partners/directors/person responsible are to be furnished. (f) Annexure in Form 101E is to be furnished wherein details of Licensed Capacity, Installed Capacity, Production, No. of persons employed, Electricity Consumer No., Annual consumption of Electricity etc., are to be furnished.
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(g) Form No. 106, a declaration of in respect of manager of the business DOCUMENTS TO BE ATTACHED WITH APPLICATION IN FORM NO. 101 Following Documents duly attested by STP/Advocate/Gazetted Officers are required to be furnished along with Application for Registration in Form 101. (a) Two photographs of proprietor, karta, each partner of the firm or, each director of the company (except for nominee directors of State or Central Govt. organization) as the case may be. (b) Documents relating to ownership proof of place(s) of business in the State of Gujarat. (c) Documents relating to residence of proprietor, karta, each partner of the firm or, each director of the company (except for nominee directors of State or Central Govt. organization) as the case may be. FURNISHING OF SECURITY A dealer furnishing any three of the following documents shall pay security of Rs. 10,000/-. (a) last paid electricity bill in his name or his parent’s name or his spouse’s name (b) last paid telephone bill in his name or his parent’s name or his spouse’s name (c) PAN issued under IT Act, 1961 (d) any document as proof of ownership of principal place of business in his name or his parent’s name or his spouse’s name. (e) any document as proof of ownership of residential property or any immovable property in his name or his parent’s name or his spouse’s name (f) notarized photocopy of the port of proprietor, managing partner or managing director (g) Shop and Establishment Certificate (h) Registration Certificate obtained from Customs and Central Excise Authority. Where the applicant cannot furnish any three of the above documents, the security amount shall not exceed Rs. 50,000/-. The security can be furnished in the form of bond executed in Form 105, or Furnishing of NSC, or Bank Guarantee. TAX INVOICE Under the GVAT Act, two types of invoices are prescribed. Only a ed Dealer who has not opted for composition scheme can issue Tax Invoice for taxable goods only and that too, if the purchaser is a ed dealer having TIN. Tax credit is available only against Tax Invoice. Tax Invoice is required to be issued in duplicate, serially and mechanically numbered and the words “Tax Invoice” be printed on Invoice. Tax Invoice must contain prescribed details as per Rule 42 including the tax amount separately. For transfer of ITC from Principal to Agent and vice versa, Tax Invoice is required to be issued. RETAIL INVOICE Retail Invoice should be issued in duplicate, serially and mechanically numbered where sale price exceeds Rs. 100. Words “Retail Invoice” must be printed on the invoice. Invoice must contain prescribed details vide Rule 42. For sale of exempt goods, inter state sale and for sale to uned dealer retail invoices is to be prepared. Tax need not be charged separately if rate of tax is mentioned. FILING OF RETURN The returns are to be filed as under: HALF YEARLY RETURNS Co-operative Societies engaged in the manufacture of sugar or khandsari have to submit half yearly return in Form 201. QUARTERLY RETURNS Dealers opting for lump sum excepting normal works contractors (other than “On Going Works Contractor”) having tax liability exceeding Rs.60000, local traders and dealers other than those mentioned in monthly category, having tax liability of less than Rs.60000 have to file quarterly returns as under: Dealers holding lump sum tax permission u/s.14, 14A r.w. Rule 28(8)(bb), 14C and 14D
Form 202 and 202A
Dealers holding lump sum tax permission u/s.14B
Form 202, 202B and 202C
Normal Works Contractor
Form 201, 201A & 201B
Local Traders& others
Form 201, 201A & 201B.
Form 201C Half Yearly MONTHLY RETURN Following dealers are liable to file monthly returns in Form 201, Form 201A (Tax invoice sale ), Form 201B (Tax invoice purchase ). They have also to submit Form 201C (Details of Stock movement) quarterly. Importer, Exporter, SEZ Unit/Developer, Refundees u/s.40, remission u/s.41, dealers of Schedule III goods, dealers enjoying exemption/deferment and dealers having tax liability exceeding Rs.60000 in preceding year or current year excepting local traders and lump sum dealers other than dealers opting for lump sum for normal works contract under Rule 28(8)(a) having tax liability of less than Rs.60000. ADDITIONAL FORMS In case of following dealers, Additional Forms as under are also to be submitted: Dealer of Schedule III Goods Form 212 & Form 213 Dealer enjoying exemption Form 203 Dealer enjoying Deferment Form 204 Works Contractors Form 216 REVISE RETURN Return can be revised within one month from the expiry of the last date prescribed for original return. The differential tax is to be paid with interest. ANNUAL RETURN – SELF ASSESSMENT Every ed Dealer shall furnish Annual Return by way of Self Assessment by 30th June after the end of the financial year in following Form: (a) All Lump sum dealers excluding normal works
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contractor (b) All other dealers including normal Works Form 205 & 205A Contractor (other than “On Going Works Contractor”) In addition, Form 202A in case of (a) and Form 201A, 201B & 201C in case of (b) will have to submitted if there is a change as compared to the figures submitted earlier. W.e.f. 1-8-2009, Dealers liable for VAT Audit can submit Annual Return within 9 Months from end of the Year. E-FILING OF RETURNS E-Filing of returns is mandatory for Dealers having turnover exceeding Rs.1 Crore or making zero rated sale or Enjoying Exemption/Deferment, Importers, Exporters, Developer/Co-Developer of SEZ or Dealer carrying on business in processing area/demarcated area of SEZ. Such dealers shall have to file CST return also online along with Appendix I & II. E-filing dealers are exempted from filing hard copies of form 201, 201-A, 201-B & 201-C on submission of bar coded receipt to Dept. All dealers requiring ‘C’, ‘F’, ‘H’ forms shall have to e-file return along with Appendix I & II as system of issuing such forms in advance has been discontinued. E-filing of Annual s containing Trading , Profit & Loss A/c and Balance Sheet is mandatory for a dealer having total turnover exceeding Rs.1 Crore only. TIME LIMIT FOR FILING OF RETURN Monthly and quarterly returns are to be filed within 30 days from the end of the month or quarter as the case may be to which the return relates. Whereas Annual return is to be filed within three months from the end of the year to which the annual return relates. W.e.f. 1-8-2009, Dealers liable for VAT Audit can submit Annual Return within 9 Months from end of the Year. PAYMENT OF TAX Payment of tax is to be made on within 22 days from the end of the month/ quarter to which the return relates. Incase of dealers of Schedule III goods the tax payment is to be made within 12 days. Where the payment is made by cheque, date of clearing of cheque will be treated as date of payment. Tax is to be paid in Form 207 (Challan) in Govt. Treasury where chief place of business of dealer is situated. The dealers having tax paid/ payable exceeding Rs. 10 Lacs shall have to make E-payment. AUDIT UNDER GVAT As per Section 63, a dealer having turnover exceeding Rs. 1 Crore and (As per Press Release) Taxable Turnover exceeding Rs.20 Lacs is liable to get his s audited within 6 months from the end of the year and submit the same within 1 month of the date of the Audit Report. W.e.f. 1-8-2009, Dealers have to obtain Audit Report within 9 Months from end of the Year. FORMS FOR CARRIAGE OF GOODS Goods going outside the State must be accompanied by Form 402. Similarly, goods coming into the State must be accompanied by Form 403. Incase of Specified goods as mentioned below, the Form 402/403, duly authenticated by the concerned authority in advance is to be used. These forms will have to be got signed & sealed by officers at check post. Specified goods for Form 402 : Edible Oil, Oil Seeds, Oil Cakes, Iron and Steel, Ferrous and non-ferrous metals and scrap, Ceramic Products, Cumin Seeds(Jeera), Ani Seeds (Variali), Psyllium Seeds and Psyllium husk (Isabgul and Isabgul husk), Brass Parts, Processed Tobacco, All products of Tobacco including Bidi, Cigarettes, Gutkha, Scented Tobacco, Chhikni, but excluding un-manufactured tobacco, zero-rated sale to SEZ. Specified goods for Form 403 Motor Vehicles, Cement, Marble, Granite, Kota stones, Naphtha, Light Diesel Oil, High Speed Diesel Oil, Iron and Steel, Plywood, Block Boards, Boards, Decorative and Laminated Sheets, Tea in Leaf/Powder Form, Battery operated vehicles, Processed Tobacco, All products of Tobacco including Bidi, Cigarettes, Gutkha, Scented Tobacco, Chhikni but excluding un manufactured tobacco, and Yarn excepting Nylon Yarn, Polyester Viscose Yarn and Cotton Yarn. For Movement of oil cakes and edible oil including refined edible oil even within the State, a duly authenticated Form 402 was made mandatory w.e.f. 5-12-2006. The same is now postponed w.e.f. 7-5-2007. TAX DEDUCTION AT SOURCE Any Person responsible for paying amount exceeding Rs.1 Crore to the contractor or sub-contractor is liable to deduct Tax at Source at the rates of composition mentioned hereinabove. The deductor has to issue certificate of TDS in Form 703 with tax paid challan in original to contractee and file a return of the same in Form 704 by 30th June after the end of the financial year. Out of the gross payment, the amount liable for deduction is to be arrived at by deducting labour charges, price of interstate/import purchases as per declaration given by the contractor/sub-contractor in Form 702. w.e.f. 1-8-2009, every person liable to make TDS should apply for Tax Deduction Number (TDN) within prescribed time in prescribed form. TDN should be quoted on all prescribed documents etc. NOTIFICATIONS FOR CERTAIN ITEMS Notifications have been issued for following items to clarify the coverage thereof. 1. Items of Charkha and other Implements 2. Items of Farsan 3. Handicraft Articles 4. Items of Khadi Garments or Made ups there of 5. Medical Equipments, Devices and Implants 6. Industrial Inputs 7. Agriculture Inputs 8. Kirana Items 9. Packing Materials 10. Information Technology Products 11. Works Contracts
THE GUJARAT TAX ON ENTRY OF SPECIFIED GOODS INTO LOCAL AREAS ACT, 2001 Entry Tax is payable on following goods as under:
Sr. No. Specified Goods
Schedule rate (Maximum) Actually Applicable rate of Tax
1
Motor vehicles including chassis of motor vehicles and the body which is built on chassis of motor vehicles Twenty per cent
Fifteen per cent
2
Cement
Twenty per cent
Fifteen per cent
3
Marbles or Granite (raw or polished)
Twenty per cent
Fifteen per cent
4
Kota stones
Twenty per cent
Fifteen per cent
5
Naphtha
Twenty per cent
Eighteen and a half per cent.
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GUJARAT VALUE ADDED TAX ACT
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6
Light Diesel Oil
Twenty per cent
7
High Speed Diesel Oil
Twenty-Five per cent
Fifteen per cent Twenty four per cent
8
Yarn of all types except Nylon Yarn, Polyester Viscose Yarn and Cotton Yarn
Twenty per cent
Five per cent
Vide Notification Dt. 1-4-2006, Exemption from Entry Tax is granted to a dealer ed under the GVAT Act, who brings marble, granite or kota stones into local area from any place outside the states.
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