lecture notes on goa value added tax

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Lecture notes on Goa Value Added Tax Act 2005 for the benefit of undergraduate ( B com) students of Goa University.


  • Lecture notes on Goa Value Added Tax Act For B Com students of Goa university Based on B. Com Syllabus of Goa university By Dr. Sanjay P Sawant Dessai Associate Professor VVMs Shree Damodar College of Commerce and Economics Margao Goa 3/13/2014 [email protected] 1
  • THE GOA VALUE ADDED TAX (VAT) ACT, 2005 a) DEFINITIONS: Business, Dealer, Goods, Declared Goods, Input Tax, Manufacture, Out Put Tax, Person, Sale, Sale Price, Turnover, Works-Contract and Taxable Turnover. b)Registration of Dealer c)Incidence of Tax, Composition of Tax, Net Tax of Registered Dealers, Input Tax Credit, Returns & Payment of Tax. 3/13/2014 [email protected] 2
  • Introduction The goa value added tax act,2005(Goa act 9 of 2005) Passed by the legislative assembly of Goa on 13-01- 2005 Assented by the president of India on 31-03-2005 Law relating to the levy and collection of value added tax on sales of goods in the state of Goa. 3/13/2014 [email protected] 3
  • Definitions Business Dealer Goods Declared Goods Input Tax Manufacture Output Tax Person Sale Sale Price Turnover Works-Contract Taxable Turnover 3/13/2014 [email protected] 4
  • Business "business" includes, - I. any trade, commerce or manufacture; II. any adventure or concern in the nature of trade, commerce or manufacture; III. any transaction in connection with, or incidental to or ancillary to trade, commerce, manufacture, adventure or concern; IV. any transaction in connection with, or incidental to or ancillary to the commencement or closure of such business; V. any occasional transaction in the nature of trade, commerce, manufacture, adventure or concern whether or not there is volume, frequency, continuity or regularity of such transaction, whether or not trade, commerce, manufacture, adventure, concern or transaction is effected with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure, concern or transaction. 3/13/2014 [email protected] 5
  • Dealer Dealer" means any person who carries on the business of buying, selling, supplying or distributing goods, executing works contract, delivering any goods on hire purchase or any system of payment by instalments, transferring the right to use any goods or supplying by way of or as part of any service, any goods directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration. 3/13/2014 [email protected] 6
  • Goods Goods" means all kinds of movable property (other than newspapers) and includes livestock, all materials, commodities, grass or things attached to or forming part of the earth which are agreed to be severed before sale or under a contract of sale, and property in goods (whether as goods or in some other form) involved in the execution of works contract, lease or hire- purchase or those to be used in the fitting out, improvement or repair of movable property but does not include actionable claims, stocks, shares and securities 3/13/2014 [email protected] 7
  • Declared Goods Declared goods" means declared goods as defined in the Central Sales Tax Act, 1956 (Central Act 74 of 1956) Declared goods" means goods declared under section 14 to be of special importance in inter- State trade or commerce. " Goods" includes all materials, articles, commodities and all other kinds of movable property, but does not include[ newspapers], actionable claims, stocks, shares and securities; 3/13/2014 [email protected] 8
  • Input Tax Input-tax means tax charged under this Act by a registered dealer to another registered dealer on purchases of goods in the course of business. 3/13/2014 [email protected] 9
  • Manufacture Manufacture includes any activity that brings out a change in an article or articles as a result of some process, treatment, labour and results in transformation into a new and different article so understood in commercial parlance having a distinct name, character, use and includes extracting any goods but does not include such activity of manufacture as may be notified 3/13/2014 [email protected] 10
  • Output Tax Output tax in relation to any registered dealer, means the tax charged in respect of sale or supply of goods made by that dealer. 3/13/2014 [email protected] 11
  • Person Person" includes an individual, any Government, any company or society or club or association or body of individuals whether incorporated or not, and also a Hindu undivided family, a firm and a local authority and every artificial juridical person not falling within any of the preceding descriptions 3/13/2014 [email protected] 12
  • Sale Sale with all its grammatical variations and cognate expressions means every transfer of the property in goods(other than by way of a mortgage, hypothecation, charge or pledge) by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, and includes 3/13/2014 [email protected] 13
  • Sale include I. Transfer, otherwise than in pursuance of a contract, of property, in goods for cash, deferred payment or other valuable consideration; II. Transfer of property in goods (whether as goods or in some other form) involved in execution of a works contract; III. Delivery of any goods on hire purchase or any other system of payment by installments; IV. Transfer of the right to use any goods for any purpose(whether or not for a specified period), for cash, deferred payment or any other valuable consideration; V. A supply, by way of or as part of any service or in any other manner whatsoever, of goods being food or any other article for human consumption or any drink (whether or not intoxicating) where such supply or service is for cash, deferred payment or other valuable consideration 3/13/2014 [email protected] 14
  • Sale Price Sale price means the amount of valuable consideration received or receivable by a dealer for the sale of any goods less any sum allowed as cash discount, according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof, excise duty, special excise duty or any other duty or taxes except the tax imposed under this Act. 3/13/2014 [email protected] 15
  • Turnover Turnover means the aggregate amount of sale price for which goods are sold or supplied or distributed by a dealer, either directly or through another, whether on own account or on account of others, whether for cash or for deferred payment, or other valuable consideration. 3/13/2014 [email protected] 16
  • Works-Contract Works contract shall include any agreement for carrying out for cash, deferred payment or other valuable consideration, the building, construction, manufacturing, processing, fabrication, erection, installation, fitting out improvement, modification, repair or commissioning of any movable or immovable property 3/13/2014 [email protected] 17
  • Taxable Turnover "taxable turnover" means the turnover on which a dealer shall be liable to pay tax as determined after making such deductions from his total turnover and in such manner as may be prescribed, but shall not include the turnover of sale in the course of inter-state trade or commerce or in the course of export of the goods out of the territory of India or in the course of import of the goods into the territory of India and the value of goods transferred or dispatched outside the State otherwise than by way of sale 3/13/2014 [email protected] 18
  • Goa Value Added Tax 2005 Important sections Section 2 Definition Section 3 Incidence of Tax Section 4 Taxes payable by dealers Section 5 Levy of VAT of goods specified in the schedule Section 6 Reimbursement and exemption of tax Section 7 Composition of Tax Section 8 Net tax of registered dealer Section 9 Input tax credit Section 10 input tax credit exceeding tax liability Section 11 tax invoice, sale bill or cash memorandum Section 18 registration Section 24 return and payment of tax 3/13/2014 [email protected] 19
  • REGISTRATION OF DEALER. Who are liable for registration under VAT (i) A dealer is required to register in the following circumstances: A) When turnover exceed following limits(section 4) 1. 10,000/- in case of non-resident dealer and casual trader. 2. 1,00,000/- in case of importer/manufacturers 3. 5,00,000/- in any other case. For this purpose turnover includes, both the taxable and non-taxable turnover. 3/13/2014 [email protected] 20
  • Note The dealers whose turnover does not exceed the above limits need not register under VAT Act,2005. They therefore, should not charge any VAT nor are eligible for any input credit. Every dealer exporting any goods outside India or effecting stock transfers to any State and Union Territories within India, shall be liable to pay tax on all taxable sales effected within the State. 3/13/2014 [email protected] 21
  • REGISTRATION OF DEALER. B) when he is registered or liable for the registration under CST Act, 1956. (C) when a person succeeds business of a dealer due to death or transfer. II. Application for registration in Form VAT-I should be filed within 30 days from date of commencement of liability and in case of succession within 60 days along with receipted challan for registration fees. Registration is valid for three financial years. III. A dealer can also apply for voluntarily registration along with registration fees and same is valid for one financial year. 3/13/2014 [email protected] 22
  • Renewal of registration With effect from 2011-12, the Renewal of Vat registration is required to be done within 30 days from the expiry of the registration Certificate. Registrations Expiring as on 31-3-2013 need to be renewed on or before 30-4-2013. Delay in Renewal shall attract Penalty. 3/13/2014 [email protected] 23
  • What are the fees for registration Category of dealer Amount of registration /renewal fees Amount of registration /renewal fees Turnover limit up to Rs. 5 lakhs. RS. 1,000 Turnover above Rs.5 lakhs and up to Rs 40 lakhs. Rs. 3,000 Turnover exceeding Rs. 40 lakhs but Below Rs1 crore. Rs. 5,000 Turnover of Rs.1 crore and above. Rs. 10,000 Voluntary registration Rs 2,000 3/13/2014 [email protected] 24
  • Incidence of Tax (section 3) Every dealer, whose turnover of all sales made during the year exceeds the relevant limit specified in sub-section (4)(Exemption limits) of this section shall until such liability ceases under sub-section (3)( cancellation), be liable to pay tax under this Act on his turnover of sales, made, on or after the appointed day 3/13/2014 [email protected] 25
  • Levy of Value Added Tax on Goods specified in the Schedule- output tax ( section 5) There shall be levied a Value Added Tax (output tax) on the turnover of sales of goods at rates hereinafter provided: a) In respect of goods specified in Schedule A, @ 1 paisa in a rupee (one percent ) (List available on page number 60 of VAT Act. b) In respect of goods specified in Schedule B, @ 4 paise in a rupee( 4 percent ) (List available on page number 61 of VAT Act) c) In respect of goods specified in Schedule C, at the rates shown against each of the entry. (list available on Page number 62 of VAT Act) d) In respect of goods specified in Schedule D, exempt from tax. (page number 65 of VAT Act.) e) In the case of any other goods, at the rate of 12 paise in a rupee( 12.5 percent). 3/13/2014 [email protected] 26
  • Composition of Tax Any registered dealer, of the class specified in Schedule E, whose total turnover in the previous year does not exceed the limit specified in the said Schedule and who is liable to pay tax under section 3, so elects, the Commissioner may accept towards composition of tax, in lieu of the net amount of tax payable by him under this Act, during the year, an amount at the rate shown against respective class of dealers in the said Schedule calculated on total turnover, either in full or in installments, as may be prescribed. 3/13/2014 [email protected] 27
  • Composition of tax (Dealers- Schedule E) Sr. no Class of dealer Limit of turnover Rate of comp 1 Dealer other than the dealer of liquor in packed bottles, dealers effecting sale by transfer of right to use any goods and importer ` 1 crore 1 % 2 Reseller of liquor in packaged bottles ` 1 crore 1 % 3 Hotel, rest, eating house , refreshment room , boarding establishment serving food and non alcoholic beverages, other than starred category hotel, including establishments serving fast food. ` 1 crore 5% 4 Hotel including Bar and restaurant serving food alcoholic and non alcoholic beverages ` 1 crore 8% 5 Works Contractor other than importer ` 1 crore 8% 6 Sale of cooked food and non alcoholic beverages by shacks allotted by tourism department ` 20 lac ` 15k per ann 3/13/2014 [email protected] 28
  • Following dealers are not eligible for composition of tax 1. When he makes interstate sales. 2. When he brings any goods in the State of Goa. 3. When he makes consignment sales or stock transfer out of Goa. 4. When he makes sales in course of import of goods or export of goods out of Territory of India. 5. When he brings or receives goods from other States. 6. When he manufactures any goods for sale except when they are sold in hotel including bar and restaurant. 7. When he is a non-resident dealer. 8. exceeds the limit of turnover specified under the Act at any time during the year. 3/13/2014 [email protected] 29
  • Net Tax of Registered Dealers The net tax payable by a registered dealer for a tax period shall be calculated according to the following formula:- A B A = total of the tax payable in respect of taxable turnover made by the registered dealer during the tax period; and B = total input tax credit allowed to the registered dealer for the tax period. Where the amount determined by the formula is a negative amount, the registered dealer may carry forward the amount to the next tax period as per provisions of section 10. Every registered dealer shall pay in full the net tax payable by him for the tax period at the time that dealer is required to file his return as may be prescribed. u 3/13/2014 [email protected] 30
  • Input Tax Credit (section 9) Input Tax Credit either partially or wholly shall be allowed for the tax paid during the tax period in respect of goods including capital goods purchased and/or taken on hire or leased to him within Goa, other than those specified in Schedule G and/or such other goods as may be notified from time to time by the Government, provided, the goods purchased are for resale in Goa or for sale in course of Inter State Trade or in course of export outside the territory of India or used by him as raw materials/capital goods in the manufacture or processing of taxable goods in Goa or for sale by transfer of right to use. 3/13/2014 [email protected] 31
  • Returns of tax( section 24) Every registered dealer shall file a correct and complete quarterly return in prescribed form within 30 days after end of the quarter along with receipted challans In addition to any data required for proper quantification of tax, the Commissioner may require the registered dealers to furnish data for the purpose of collecting statistics relating to any matter dealt with, by or in connection to this Act. 3/13/2014 [email protected] 32
  • On line filing of return With effect from the first quarter of 2011-12, commencing from 1-4-2011 to 30-6-2011, all the Registered dealers including those who have opted for composition and whose turnover for the financial year 2010-11 has exceeded Rs. 50 lakhs (Rupees fifty lakhs only), shall file their quarterly returns online through electronic system. The first compulsory e-return for these dealers shall be due on 31-7-2011. 3/13/2014 [email protected] 33
  • Revised return If any dealer having furnished a return under sub-section (1), discovers any omission or incorrect statement therein, he may furnish a revised return within 1 year following the last date prescribed for furnishing original return or before issue of assessment notice, whichever is earlier. 3/13/2014 [email protected] 34
  • Penalty to file return A person who fails to file return within the time required under this Act shall be liable to pay penalty of Rs. 500/- for every quarter plus an amount equal to simple interest @ 18% per annum or at such rate as the Government may specify by notification, from time to time, on the tax payable for the return period. 3/13/2014 [email protected] 35
  • Cancellation of registration for non filing of return Any dealer who fails to file three consecutive returns, the certificate of registration granted to such dealer shall stand cancelled from the date of expiry of the period for filing of such third return. Fresh registration shall be granted to such dealer prospectively upon payment of penalty of Rs. 25,000/- in addition to the payment of tax, interest and penalty as assessed under the registration so cancelled. 3/13/2014 [email protected] 36
  • Payment of Tax. A registered dealer furnishing returns as required shall pay into the Government treasury or any notified Bank at such intervals as may be prescribed . Along with the amount of penalty, interest and any other sum payable by him. 3/13/2014 [email protected] 37
  • Time limit to pay the tax Payment of Tax If monthly tax liability exceeds Rs.1,00,000 other than who had opted for composition of tax. Within 20 days from the end of each month If monthly tax liability is up to Rs.1,00,000, other than who had opted for composition of tax Within 25 days from the end of each month Who opted for composition of tax. Within 30 days from the end of quarter 3/13/2014 [email protected] 38
  • Interest on default The amount of tax due where the return or revised return has been furnished without full payment thereof shall be paid forthwith along with interest on defaulted amount @ 12% p.a. or at such higher or lower rate as the Government may notify from time to time. 3/13/2014 [email protected] 39
  • Calculation of tax When the sales are made inclusive of tax, tax amount should be worked out on the following formula : Tax amount = R x A 100 + R Where R = rate of tax A = Aggregate of sales price 3/13/2014 [email protected] 40