delhi value added act, 2004

8/3/2019 Delhi Value Added Act, 2004

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VATyVAT is a multi-point tax on value addition which is

collected at different stages of sale with a provision for

set-off for tax paid at the previous stage/tax paid oninputs


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Who is Covered under the DVAT

Systemy Dealers with total annual turnover exceeding Rs 5 lakh

are required to register. However, dealers with annual

turnover less than Rs 5 lakh may voluntarily getthemselves registered and the Dealers who make intersate sale or Purchase.

yAfter getting registered the dealer has to file and

submit a return within 28 days from the end of the TaxPeriod.

y If theDealers deal entirely in exempt goods, they arenot required to apply for registration underDVAT.


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Calculation of Taxes

y

Net Tax Payable is the difference between your Output Tax and Tax Creditsyou are allowed to claim in a given tax period. It could be a positive or anegative amount. The negative amount represents tax credits in excess ofoutput tax for a given period. you can apply the excess credits against your CSTliability, and claim a refund for any remaining balance. Alternatively, theexcess credits can be carried forward to the next period.

y Example

A dealer ABC in Delhi purchases goods in Delhi for which he pays Rs 2000 asinput tax. He makes a sale in Delhi for which the tax is Rs 900. He also makesan inter-state sale to another dealer situated outsideDelhi for which the CSTis Rs 3000.

His netDVAT liability for the period is a negative amount of Rs 1100. He canapply this negative amount against his CST liability.

He will be required to pay Rs 1900 (CST of Rs 3000 reduced by excess DVATcredits of Rs 1100) to the government.


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CAPITAL GOODSy Capital goods means plant, machinery and equipment

used, directly or indirectly, in the process of trade ormanufacturing or for execution of works contract inDelhi;

y Sale of Capital Goods exempt from Tax :- Where adealer sells capital goods which he has used since thetime of purchase exclusivelyfor purposes other than

making non-taxed sale of goods, and has not claimed atax credit in respect of such capital goods undersection 9, the sale of such capital goods shall beexempt from tax


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y Tax Credit on Purchase of Capital Goods :-Notwithstanding anything contained to the contrary insub-sections (1) and (3) and subject to sub-section (2), taxcredit in respect of capital goods shall be allowed as

follows: -y 1. 1/3rd of the input tax on such capital goods arising in the

tax period, in the same tax period ;

y 2. balance 2/3rd of such input tax, in equal proportions intwo immediately successive financial years ;

Unless these Goods are Non Creditable Goods.

No Tax Credit is allowed on purchase of capital goodswhich are used exclusively for the purpose of making saleof exempted goods.


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Capital Goods vs. Capital Assetsy It is important to note that exemption on sale is available to

only those Capital Goods as defined byDVAT Act and notto all Capital Goods. Therefore, goods such as officefurniture or office vehicle, which are not used in theprocess of trade or manufacture and do not fall underdefinition of capital goods will not qualify for exemption.

y DVAT has not defined Capital Assets.

y Capital Assets is a wider term and covers all those CapitalGoods which are used for the purpose of business, andtherefore, will include furniture, motor Vehicle etc.


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INPUT TAX CREDITy Tax credit shall be allowed on purchases arises in the course of his

activities as a dealer and the goods are to be used by him directlyor indirectly for the purpose of making a taxable sales which areliable to tax or sales which are not liable to tax (Non Taxed Sales)i.e. inter state sales and export out ofDelhi.

y No tax credit shall be allowed1. on purchases from an unregistered Dealers

2. on purchase of non creditable goods

3. on purchase of goods which are to be incorporated into thestructure of a building owned or occupied by the person i.e. for the

performance of a Work Contract.4. on purchase from dealers who opted for composition scheme

5. on purchase from a casual trader

6. on purchases which are used exclusively for making exemptedgoods.


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7. any purchase of consumables or of capital goods where the dealer isexclusively engaged in doing job work or labour work and is notengaged in the business of manufacturing of goods for sale by him

and incidental to the business of job work or labour work, obtains anywaste or scrap goods which are sold by him.

Where a dealer has purchased goods and the goods are to be usedpartly for the purpose of making the taxable sales and partly for other

purposes, the amount of the tax credit shall be reducedproportionately.

Types of Sales OutputTax Payable InputTax creditallowed

Taxable Yes Yes

Exempt No No

Non Taxed no Yes


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Composition Scheme

y Notwithstanding anything contained to the contrary in thisAct, every dealer whose

y a. turnover in the year preceding the commencement of

this Act; ory b. turnover in the current year, does not exceed fifty lakh

rupees or such other amount as may be specified by theGovernment by notification in the official Gazette, shallhave an option to pay tax under this section:

PROVIDED that this section shall not apply to dealers whomake inter state sales or purchases at any time during theyear in which he opts to pay tax under this section or if heis registered under the Central Sales Tax Act, 1956


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Rate of tax for composition Dealer

y 1% of the TURNOVER of the Dealer.

A dealer who elects to pay tax under this section shall -y not purchase goods from a person who is not registered under

this Act:

PROVIDED that this restriction shall not apply for the purchaseof goods from an un-registered dealer dealing exclusively ingoods mentioned in the First Schedule i.e. exempted goods.

y not compute his net tax under section 11 of this Act;y not be allowed to claim credit under section 9, section 14 and

section 15 of this Act;y not be entitled to issue tax invoice;y not be allowed to collect any amount by way of tax under this

Act; andy continue to retain tax invoices and retail invoices for all of his

purchases as required under section 48 of this Act.


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Work Contracty n case of TURNOVER arising from the execution of the works

contract, the amount representing the TAXABLE TURNOVER shallbe the value at the time of transfer of property in goods (whether asgoods or in some other form) involved in the execution of work

contract and shall EXCLUDE-1. the charges towards labour, services and other like charges; and

2. the charges towards cost of land, if any, in civil workscontracts;subject to the dealers maintaining proper records such asinvoice, voucher, challan or any other document evidencing

payment of referred charges to the satisfaction of theCommissioner.

y In the case of works contract of civil nature, the tax shall be payableby the contractor during the tax period in which the property ingoods is transferred


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Forms prescribed under CSTForm Description Frequency

A Application for registration Once

B Certificate of Registration Once

C Declaration by purchasingregistered dealer to obtain goodsat concessional rate

To be obtained for everyquarter and submitted onquarterly basis

E-I/E-II Certificates for sale in transit To be obtained for everyquarter and submitted onquarterly basis

F Form by branch/consignmentagent for goods received on stocktransfer

Monthly, but to besubmitted to authoritiesquarterly

G Indemnity bond when C form lost When required

H Certificate of Export Upto the time of

assessment by first

assessing authority.

delhi value added act, 2004

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