tax presentation
TRANSCRIPT
Different Types of Sale Transactions
VAT sales Composite sale Central sale Sale in Transit (E1/C1 sale) High Sea Sales
Basic Structure of our Contracts
Broadly three types of contracts
Supply (S) Erection
(E)Composite Contracts
(S+E)
VAT Service Tax
VAT + Service Tax
VAT – Two Different Scheme of Taxation
VAT
VAT is applicable on the supply of Goods. In a
composite contract supply part is segregated and VAT
is levied on that part.
Composite Tax
Composite Tax also known as Works Contract Tax (WCT) is applicable
on the total contract value
A Simple Example
oroJob Value = 100
Supply = 80
Erection = 20
WCT @ 4% = 4
VAT @ 12.5% = 10
Service Tax @ 12.36% = 2.472
OR AND
Central Sale
The physical movement of goods from one state to another state is called central sale
Sale is a central sale
Supplier at Delhi Sterling & Wilson (Customer) at Haryana
Central Sale
C-Form is issued by the Sterling & Wilson (Customer) to the supplier
Goods are purchased @ 2% CST against the issuance of C-Form
C- Form
The rate of tax on interstate sales is governed by Central Sales tax Act and if the sale is made to a registered dealer of the another state then the rate of tax is 2% but the registered dealer (i.e. ) the purchaser have to supply C-form to the seller . The rate of tax without C-form in case of interstate trade or commerce is equal to the rate of tax applicable in the state of the seller. In fact C-form is the proof that the sales is made to a registered dealer of another state.
Sale in Transit
“Sale in transit” is the sale of goods by the endorsement of documents during the goods are being transported
It is also known as “E1-C1 Sale” Sale in transit is done to avoid double
taxation
Sale in Transit
‘C’ Form from B to A ‘C’ Form from C to B
E1-Form from A to B
Supplier in UP
“A”
Sterling & Wilson in Delhi
“B”
Client in Haryana
“C”
Sale in Transit
It is essential that the origin and destination of goods has to be in different states
In this example “A & B” or “B & C” can be in the same state but “A & C” have to be in different states
CST is payable only in first transaction between A & B but sale between B & C is without any additional CST liability
Similarly there can be multiple transactions known as E2-C2 or E3-C3 transaction.
A simple example can be that, suppose A of Mumbai has sold goods to B of Ahmadabad. The goods are dispatched by lorry and L.R. is taken out by A (Mumbai) where in A is consignor and B (Ahmadabad) is consignee. If before taking delivery from transporter, B decides to sell his goods to ‘C’ of M.P., he can simply endorse the L.R. in name of ‘C’ and the sale will be complete. This is the second or subsequent interstate sale in the course of same movement. In this case A must have charged 4% CST in his bill. Being a second interstate sale effected by B to C, B is equally liable to pay CST on above transaction. However the intention of Government is not to levy multiple taxes on sale taking place in one course of movement. Therefore the subsequent sale is given exemption. However it is subject to production of given forms. In above example, the sale by B to C will be exempt if B produces before his assessing authority Form EI issued by A of Mumbai and Form ‘C’ issued by C of M. P.
High Sea Sales
“High Sea sales” is the same transaction as “Sale in transit” with the difference that it is applicable in imported goods
Goods are sold when they are in High Seas before they touch the Indian Customs
“High sea sales agreement” is entered into between the importer and the ultimate buyer
No VAT is payable as the sale transaction has happened outside the Indian territory
High Sea Sales
While the goods are in High Seas
High Sea sales
Agreement
Supplier in France
“A”
Importer in India“B”
Customer in India“C”
High Sea Sales
Order is placed and goods are imported by “B” from “A”
While the goods are in high seas, goods are sold by “B” to “C” by entering into a high sea sales agreement
Custom clearance of the goods is done by “C” in its own name
No VAT is applicable in this transaction
SEZ Transaction
Certain benefits are available in SEZ, which we pass on to the client
SEZ benefits are available in two categories:– Central Taxes– State Taxes
SEZ Benefits
Central Taxes:– Excise duty is NIL against issuance of ARE-1– CST is NIL against issuance of Form-I– Exemption from payment of Services Tax
State Taxes:– VAT – WCT– Entry Tax etc.
(Exemption is available as per State Rules)
EPCG transactions
Certain benefits are available in procurement of capital goods, which are used for increasing the exports out of India, through a scheme known as “Export Promotion Capital Goods” or “EPCG” scheme
Benefits available under the scheme:– Excise duty is NIL – Concessional custom duty @ 3.09% is payable for
imported capital goods
Procedure for Availing EPCG Benefits
Excise Duty @ NIL:– EPCG license is provided by the customer to S&W– Goods are cleared by the supplier against the EPCG
license after payment of excise duty– Refund of excise duty is done by DGFT– Refund can be claimed by
Suppler S&W Client
– Disclaimer certificate is issued by party who is not claiming refund of excise duty
Procedure of Availing EPCG Benefits
Concessional custom duty payable @ 3.09%:
– EPCG license is provided by client to S&W
– Goods are cleared against EPCG License after payment of concessional custom duty @ 3.09%
Miscellaneous Provisions in Different States
Entry Tax is applicable in some states
Road permits are applicable in certain states for inward and outward movement of goods in some states
In some states Octroi is also applicable