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Regional Training Regional Training Institute, RanchiInstitute, RanchiRegional Training Regional Training Institute, RanchiInstitute, Ranchi
Structured Training Structured Training Courseware on State Receipts Courseware on State Receipts
AuditAudit
Audit of Entry TaxAudit of Entry Tax
RTI, Ranchi 2
Session ObjectivesAt the end of this session, the
participants will be able to • Explain the nature of Entry Tax• Understand the procedures relating to
registration, assessment and collection of entry tax and
• Discuss audit checks relating to entry tax
RTI, Ranchi 3
Introduction• Entry tax falls under State List of
the Seventh Schedule of the Constitution
• It is levied on entry of goods into a local area for consumption, use or sale
RTI, Ranchi 4
Entry Tax vs. Octroi• Both entry tax and octroi are levied on
entry of goods into a ‘local area’. However, • Octroi is levied by a local body (e.g.
Municipality, Market Committee) on goods entering into area administered by it
• Entry tax is levied by State Government
RTI, Ranchi 5
Entry Tax vs. Octroi• Entry tax has been introduced in
lieu of octroi by many States• Some States have both entry tax
and octroi
RTI, Ranchi 6
Statutes • In Bihar & Jharkhand, Sales Tax
Law relating to assessment, collection and other matters is applied to Entry Tax as well
• Rates of entry tax, penalty, fines etc. figure in Bihar Tax on entry of goods into Local Area Act, 1993
RTI, Ranchi 7
Scope of Entry Tax• Entry tax is levied,
– When a dealer purchases goods for sale
– When a person purchases goods for consumption / use
– When a dealer / person imports any scheduled goods above a specified quantity
RTI, Ranchi 8
Local Area• Local area is defined by most States as
area within the limit of municipality, gram panchayat or any other local authority– Entry of goods into local area is thus either
entry of goods from outside the State into a local area, or from any other local area within the State to another local area
RTI, Ranchi 9
Exemptions and Reductions
Following exemptions are given to avoid multiple or cascading effects of taxation
• Where entry tax is paid at the first point of entry of goods into the State, subsequent sale of goods into other local areas within the State is exempted from payment of tax
RTI, Ranchi 10
Exemptions and Reductions
• Dealers can claim reduction in the liability of sales tax on account of entry tax paid in some States, subject to proper documentation
RTI, Ranchi 11
Penalties and Fines• Penalties are levied on dealers in
respect of entry tax for, – Evading payment of tax– Acting in contravention of provisions
of Act– Short accounting of imported goods– Wrong affidavit for discontinuance of
business
RTI, Ranchi 12
Organizational Set upSame as for Sales Tax
Commissioner of Commercial Taxes
Sr. JointCommissioner
(Hdqrs.)
Jt. Commissioner(Investigations)
DivisionsJt. Commissioner
CirlceDy. Commr./Asst. Commr/Commercial Taxes Officer
RTI, Ranchi 13
Forms and RegistersFORM-ET-IFORM-ET-IIFORM-ET-IIIFORM-ET-IVFORM-ET-VFORM-ET-VIFORM-ET-VII
FORM-ET-VIII
Application for registrationCertificate of registrationMonthly ReturnQuarterly ReturnAnnual ReturnChallanApplication by an importer of a motor vehicle for issuance of a certificate for productionCertificate of registration for Motor Vehicles
RTI, Ranchi 14
Forms and Registers (contd.)
FORM-ET-IX
FORM-ET-X
FORM-ET-XI
FORM-ET-XII
Declaration received from the selling dealer
Statement of claim for reduction in the liability of sales tax payable consequent upon payment of Entry Tax
Purchase of scheduled goods from
registered dealers where tax was
realized at first point of entry
Security bond
RTI, Ranchi 15
Forms and Registers (contd.)
Register IIRegister IIIRegister IVRegister VRegister VIRegister VIIRegister VIIIRegister XIIRegister XIIIRegister XIVRegister XVI
Application for registrationCancellation of registrationApplication for amendment of Regn. CertificateRegister of registered dealersDues and collection registerDisposal register for officersProgressive Collection registerRequisition from appellate & requisition officerRegister of securitiesSeized Book of Accounts and disposalInspection of unregistered dealers
RTI, Ranchi 16
Tax AdministrationRegistration• Dealer liable for tax should make application
for registration separately in respect of every place of business within 7 days of becoming liable
• Officer-in-Charge of Circle grants registration certificate within 30 days
• Security not exceeding estimated amount of annual entry tax payable may be demanded
RTI, Ranchi 17
Tax Administration (contd.)
Returns• Every registered dealer liable to pay tax
is required to furnish the following:– Abstract Monthly Return– Quarterly and Annual ReturnFor import of all scheduled goods and tax
payable thereon
RTI, Ranchi 18
Tax Administration (contd.)
Assessment• Assessment is finalized on any of the
following basis:– On the basis of returns furnished – After calling for accounts and other evidence – Ex-parte after providing reasonable
opportunity to the assessee Assessee to remit balance tax due within 45
days of receiving demand notice
RTI, Ranchi 19
Tax Administration (contd.)
Payment of tax• Assessee is required to deposit every
month entry tax due, into Government treasury, by challan
• For import of motor vehicles (other than dealer) entry tax is to be paid before applying for registration of the vehicle
RTI, Ranchi 20
Tax Administration (contd.)
Reduction from Sales Tax• Where entry tax paid on goods
dealer can claim reduction in liability of sales tax
RTI, Ranchi 21
Appeal, Revision & Review
• Procedure for appeal, revision and review of assessments of entry tax is similar to that followed for sales tax assessments
RTI, Ranchi 22
Audit Checks• Whether application for registration
submitted within specified time frame• Whether registration granted within
stipulated period • Whether registration received within
prescribed period of submission of renewal application
RTI, Ranchi 23
Audit Checks (contd.)• Whether security for payment of
tax furnished within 2 months• Whether market survey to unearth
dealers been conducted each year• Number of dealers against whom
proceedings have been initiated
RTI, Ranchi 24
Audit Checks (contd.)• Whether returns submitted in time and
tax deposited within due date• Whether penalty imposed for delayed
filing and delayed payment of tax• Whether dealer furnished details of
quantity and value of goods received, along with annual return
RTI, Ranchi 25
Audit Checks (contd.)• Whether gross turnover determined on
the basis of quantity / annual returns and compared with books of accounts
• Whether exemptions were allowed with reference to rules
• Whether correct rates of tax were applied
RTI, Ranchi 26
Audit Checks (contd.)• Whether appeal was preferred within
prescribed time frame• Whether re-assessment initiated and
completed within prescribed time frame• Whether claim for refund entertained
within stipulated time frame