Recent
Events Held :
REPORT
ON SEMINAR ON VALUE ADDED TAX HELD ON FEBRUARY 11, 2005 AT 6.30
P.M. AT WALCHAND HIRACHAND HALL OF IMC.
Mr.
Subash Chander Gogia, Hon. Secretary & Chairman, Programmes
Committee welcomed the gathering. He informed the gathering that
the focal objective of the seminar which was to educate the consumers
to make an informed decision. Mr. Gogia then elaborated about the
future programmes of CFBP. Which are tentatively fixed on March
4, 2005 - a seminar on Union Budget 2005 – 2006 and on March
15, 2005 on the eve of World Consumer Day on Right to Information
Act. He also appealed the gathering to strengthen CFBP by enrolling
as a member.
Mr.
V. B. Haribhakti, President then expressed his views with respect
to VAT. He said that most likely it would be implemented from April
2005. He also said that it is better in the interest of the economy
in long run. He also appealed the gathering to be part of CFBP as
members.
Mr.
Gogia then introduced Mr. Apurva Agarwal, Advocate Universal Legal
and requested him to commence the presentation. In his presentation
Mr. Agarwal explained the gathering a gist of the white paper presented
by Government on VAT.
He
has covered following points in his presentation:
·
Tax is assessed as a percentage of sale price on value added to
all commercial activities of goods and services.
· Tax is paid only on value added at each stage of production
and distribution of goods and the provision of services.
· A consumption tax - borne ultimately by final consumer
- an indirect tax
· Payable on sale of goods within the State.
· Liquor, lottery tickets, petrol, diesel, aviation turbine
fuel and other motor spirit – governed by State Sales Tax
laws or by special provisions under VAT laws.
· VAT on AED items relating to sugar, textile and tobacco
only after one year from introduction of VAT. [ AED stands for Additional
Excise Duties in lieu of sales tax ]
· VAT on imports and service tax targeted to be integrated
alongwith with AED items in the second year.
· A Mine sells iron ore to a Smelter for Rs.1000
· If VAT rate is 20%, Mine charges the Smelter Rs.1200.
· Since Mine has bought Rs.240 worth of tools in same accounting
period, including Rs. 40 VAT, Mine is required to pay Rs.160 (Rs.200
less Rs.40) to the Treasury.
· Four specific rates of VAT as follows :
· Exempted Goods – 46 commodities - natural and unprocessed
products in unorganized sector,
· 1% - Special VAT Rate - gold and silver ornaments
· 4% - about 270 goods - Basic Necessities goods
· 12.5% - General VAT Rate - items having social implications
·
Allowed to both manufacturers and traders.
· Credit to be allowed on purchase of inputs/supplies meant
for sale, irrespective of when the goods will be utilized/sold.
· Tax paid on inputs procured from other States will not
be eligible for credit.
· In case of stock transfer/consignment sale outside the
State, Input Tax paid in excess of 4% will be eligible for tax credit.
· Allowed to both manufacturers and traders.
· Credit to be allowed on purchase of inputs/supplies meant
for sale, irrespective of when the goods will be utilized/sold.
· Tax paid on inputs procured from other States will not
be eligible for credit.
· In case of stock transfer/consignment sale outside the
State, Input Tax paid in excess of 4% will be eligible for tax credit.
·
Tax credit on capital goods (except items under negative list) to
be allowed and adjusted over a max. of 36 equal monthly installments.
· Unadjusted tax credit to be carried forward to next financial
year.
· Any excess unadjusted tax credit at the end of second year
will be eligible for refund.
· Units located in SEZ and EOU will have an option of not
paying input tax or claiming refund of the input tax paid within
three months.
· Tax paid on exports within the state will be refunded in
full within 3 months.
· All tax-paid goods purchased on or after April 1, 2004
eligible to receive Input Tax
· Credit, subject to submission of requisite documents.
· Resellers holding tax-paid goods on April 1, 2005 will
also be eligible.
· Tax credit will be available over a period of 6 months
after an interval of 3 months needed for verification.
· Every registered dealer will be required to issue Tax Invoice
containing specified details.
· Returns to be filed monthly or quarterly as specified in
the State Acts/ Rules.
· Tax Payer’s Identification Number will consist of
11 digit numerals throughout the country.
· No need for declaration forms as there will be no concessional
rate of VAT.
· VAT liability will be self-assessed by the dealers.
· The dealer will be deemed to have been self-assessed on
the basis of returns submitted by him.
· Implementation of VAT from April 1, 2005
· All other existing taxes such as turnover tax, surcharge
and additional surcharge and special additional tax (SAT) would
be abolished
· States who have implemented Entry Tax and intend to continue
under VAT regime are required to make it VAT-able.
· Existing Incentive Scheme can be continued by State in
an appropriate manner after ensuring that the VAT chain is not affected.
· Small dealers with gross annual turnover not exceeding
Rs. 5 lakhs will not be liable to VAT
· Dealers with gross annual turnover not exceeding Rs. 50
lakhs shall have an option for a composition scheme with payment
of tax at a small percentage
· Most of the States have either already modified or modifying
their VAT Bills towards introduction of VAT from April 1, 2005.
· The States have started the process of preparing the draft
of VAT Rules.
· The States have initiated steps for computerization up
to the levels of assessing officers and also at the check posts.
· VAT attempts to simplify and rationalize the taxation regime
relating to goods and services
Mr.
Gogia then requested Mr. Haribhakti to offer a floral bouquet to
Mr. Dilip Dixit, Dy. Commissioner Sales Tax. A floral bouquet has
been offered to Mr. Dinesh Parekh, President, TBIA, Mr. Mohammadli
Patel, Hon. General Secretary, FAM, Mr. Anil Gachke, Vice President,
MCCI, Mr. Apurva Aggarwal and Mr. Divakara, Director General of
Forum of Free Enterprise.
Mr.
Gogia then introduced Mr. Dilip Dixit, Dy. Commissioner, Sales Tax
and requested him to give his speech. In the interactive discussion
Mr. Dixit answered several questions raised by the audience. He
covered following points in his speech.
-
Sales are covered under VAT
- Inpute Tax Credit – Calculation with example
- Credit Purchase of Capital Assets
- Transfer of Goods / Sale of Goods (Branch transfer / consignment
transfer)
- Set Off method
- Tax Rate under VAT
- Registration Procedure for VAT
- Assessment under VAT
- Importance of invoice under VAT
- Composition Scheme
- Central Sales Tax Forms
- Effects on CST after introduction of VAT
- MRP and VAT
- Effect of VAT on States
- Inter state Sales
Mr.
Dinesh Parekh, Vice President, CFBP then gave Vote of thanks and
expressed his gratitude towards speakers, sponsors, representatives
of various newspapers – News Channels and the distinguished
audience for attending the seminar. An information booklet on ‘Value
Added Tax” was distributed to the audience at the end of the
seminar.
