Description
It describes VAT is a multi-point Sales Tax and is collected on value addition only at each stage.VAT calculation and features.
VALUE ADDED TAX VAT
WHAT IS VAT ?
It is a multi-point Sales Tax and is collected on value addition only at each stage.
SALES TAX IS A STATE SUBJECT
VII th SCHEDULE OF CONSTITUTION OF INDIA
54TH ENTRY OF THE STATE LIST
WHITE PAPER ON STATE VALUE ADDED TAX
CONSTITUTED BY THE MINISTRY OF STATE FINANCE GOVT. OF INDIA
EMPOWERED COMMITTEE MEETS ON 17th JAN.2005
WHAT FOR VAT ?
To harmonize uniform rates of Sales Tax
To avoid unhealthy Sales Tax rate WAR
To harmonization of incidence of Sales Tax & incentive Schemes
TREATMENT OF OPENING STOCK
All Goods purchased between 1st April 2004 to 1st April 2005 will be eligible to receive input- tax credit
Salient features of VAT
@ Abolition of
Turnover Tax Surcharge on Sales-Tax Additional Tax Special Additional Tax Resale Tax
@ Incentive to buy only from Registered Dealers @Transparency in Trade and Industry @ Reduces need to interact with Tax personnel @ Major blow for Tax Evader @ Simplier- easy Computation & easy Compliance
Value Added Tax Liability
Less than 5 Lakhs – No Liability Not covered under VAT Between 5 Lakhs to 50 Lakhs – Liabler to pay VAT but shall have option to accept COMPOSITION SCHEME Above 50 Lakhs - Compulsory Two fold Tax Liability – 4% and 12.5% All items covered in 550 Entries 46 natural and unprocessed local products would be exempt About 270 items, including drugs and medicines, all agricultural and industrial inputs, capital goods and declared goods would attract 4% VAT. Three items – sugar, textile, and tobacco – under additional excise duties will not be under VAT
VAT CALCULATION
Format
Manufacturer Wholesaler SemiWholesaler Retailer
Price
1000 1050 1100 1200
VAT @ 12.5%
125.00 131.25 137.50 150.00
Output Tax Govt. gets – Input Tax
From Set-off = 125 125 – 131.25 = 6.25 137.50 – 131.25 = 6.25 150-137.50 = 12.5 125 6.25 6.26 12.50 150
Bill Amount
1125.00 1181.25 1237.50 1350.00
What will happen to the Sales Tax Act? It will continue for pending assessments, appeals, and recoveries. And for certain commodities as the government may decide.
What will happen to the Central Sales Tax? In an ideal VAT regime, there is no room for CST. To begin with, the government is contemplating certain amendments in the CST.
doc_948223915.ppt
It describes VAT is a multi-point Sales Tax and is collected on value addition only at each stage.VAT calculation and features.
VALUE ADDED TAX VAT
WHAT IS VAT ?
It is a multi-point Sales Tax and is collected on value addition only at each stage.
SALES TAX IS A STATE SUBJECT
VII th SCHEDULE OF CONSTITUTION OF INDIA
54TH ENTRY OF THE STATE LIST
WHITE PAPER ON STATE VALUE ADDED TAX
CONSTITUTED BY THE MINISTRY OF STATE FINANCE GOVT. OF INDIA
EMPOWERED COMMITTEE MEETS ON 17th JAN.2005
WHAT FOR VAT ?
To harmonize uniform rates of Sales Tax
To avoid unhealthy Sales Tax rate WAR
To harmonization of incidence of Sales Tax & incentive Schemes
TREATMENT OF OPENING STOCK
All Goods purchased between 1st April 2004 to 1st April 2005 will be eligible to receive input- tax credit
Salient features of VAT
@ Abolition of
Turnover Tax Surcharge on Sales-Tax Additional Tax Special Additional Tax Resale Tax
@ Incentive to buy only from Registered Dealers @Transparency in Trade and Industry @ Reduces need to interact with Tax personnel @ Major blow for Tax Evader @ Simplier- easy Computation & easy Compliance
Value Added Tax Liability
Less than 5 Lakhs – No Liability Not covered under VAT Between 5 Lakhs to 50 Lakhs – Liabler to pay VAT but shall have option to accept COMPOSITION SCHEME Above 50 Lakhs - Compulsory Two fold Tax Liability – 4% and 12.5% All items covered in 550 Entries 46 natural and unprocessed local products would be exempt About 270 items, including drugs and medicines, all agricultural and industrial inputs, capital goods and declared goods would attract 4% VAT. Three items – sugar, textile, and tobacco – under additional excise duties will not be under VAT
VAT CALCULATION
Format
Manufacturer Wholesaler SemiWholesaler Retailer
Price
1000 1050 1100 1200
VAT @ 12.5%
125.00 131.25 137.50 150.00
Output Tax Govt. gets – Input Tax
From Set-off = 125 125 – 131.25 = 6.25 137.50 – 131.25 = 6.25 150-137.50 = 12.5 125 6.25 6.26 12.50 150
Bill Amount
1125.00 1181.25 1237.50 1350.00
What will happen to the Sales Tax Act? It will continue for pending assessments, appeals, and recoveries. And for certain commodities as the government may decide.
What will happen to the Central Sales Tax? In an ideal VAT regime, there is no room for CST. To begin with, the government is contemplating certain amendments in the CST.
doc_948223915.ppt