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Variants of VATIncomeVariantGross Product VariantConsumptionVariantThe Income Variant of VAT on the other hand allows for deduction on purchase of Raw Materials & Components as well as Depreciation on Capital Goods.OUTLINE : -IntroductionCalculation of VAT liabilityVariants of VATMethods of calculation of VATMerits of VATDemerits of VATRole of C.A in VATInput Tax CreditEligible purchases for input vat creditNot Eligible purchases for input vat credit

11) VAT features for SMALL DEALERS12) Tax Identification Number13) VAT Certificate14) Different rates of VAT15) E-filing of Returns:a) What is E-filing?b) Procedure for E-filing of VAT Return

Introduction VAT is a indirect tax. VAT is a tax on the sale of goods. VAT is imposed on intra-state sale. VAT is imposed only on the amount of value addition made. In 1986, India introduced VAT in a different way under name of MODVAT.PRODUCT XSale Price 100Gross VAT 12.50Net VAT 12.50PRODUCT YSale Price 100Gross VAT 4Net VAT 4ManufacturerSale Price 300Gross VAT 37.50Net VAT 21{ 37.50-(12.50+4)}WholesalerSale Price 400Gross VAT 50Net VAT 12.50( 50-37.50)RetailerSale Price 500Gross VAT 62.50Net VAT 12.50( 62.50-50)Calculation of VAT liabilityVariants of VATIncomeVariantGross Product VariantConsumptionVariantVariants of VATIncomeVariantGross Product VariantConsumptionVariantThe Gross Product Variant allows deduction for taxes on all purchases of Raw Materials & Components, but no deduction is allowed for taxes on Capital Inputs.Variants of VATIncomeVariantGross Product VariantConsumptionVariantThe Consumption Variant of VAT allows for deduction on all Business Purchases including Capital Assets. Thus, gross investment is deductible in calculating value added.Variants of VAT Consumption Variant is widely used. It does not affect investment decisions because the tax on Capital Goods is also set-off against the VAT liability. The system is tax neutral in respect of techniques of production (labour or capital-intensive). It does not cause any cascading effect.Methods for computation of taxMerits of VAT Not cascading effect Certainty Transparency Better revenue collection Better accounting system Effect on retail price

Demerits of VAT Incase of Different VAT rate cascading effect occur CST credit not available against VAT Accounting cost increase Blockage of working Capital Increase in Administration cost

Role of CHARTERED ACCOUNTANT in VAT Record keeping Tax planning Negotiation with suppliers to reduce cost External audit of VAT recordsInput tax creditTax paid on the earlier point is called Input Tax. This amount will be adjusted/rebated against the tax payable by the purchasing dealer on his sales. This credit availability is called Input Tax Credit.Eligible purchases for availing Input Tax Credit Sales within State InterState Sales Works Contract Purchase of Capital Goods for production Exports of goods Zero Rated SalesTaxable goods should be purchased for any of the following reasons:-Not Eligible purchases for availing Input Tax Credit Purchase from Unregistered dealer Purchase from dealer opting Composition Scheme InterState Purchase Purchase of Goods where the purchase invoice is not availableInput tax credit may not be allowed in following cases:-Not Eligible purchases for availing Input Tax CreditPurchase of goods where invoice does not show the amount of tax separately Purchase of goods which are been utilized in manufacture of exempted goods Goods imported from outsideInput tax credit may not be allowed in following cases:-VAT features for Small DealersSmall dealers with annual gross turnover not exceeding 50 lakhs who are otherwise liable to pay VAT, shall however have the option for a Composition Scheme with payment of tax at a small % of gross turnover i.e. 0.25%. The dealer opting for this composition scheme will not be entitled to input tax credit.Registration for VAT will not be compulsory for dealers below a threshold turnover i.e. 5 lakhs. VAT features for Small DealersEligibility for the composition scheme:- Only for intra-state sale or commerce. Dealer cannot import or export of goods. Dealer cannot transfer goods outside state.VAT features for Small DealersCondition for exercising option:-Dealer should not have any stock of goods which were brought from outside the state on the day he exercise his option to pay tax by way of composition and shall not use any goods brought from outside the state after such date.The dealer should not claim any input tax credit on the inventory available on that date.TIN is a numerical code allowed to every dealer obtaining registration under the VAT-law. It is the registration number, which is intend to identify a tax payer. The 11- digit numerical code shall be made as follows

(a) first 2-digit : state code as used by the Union MINISTRY of Home Affairs ; (b) Next 9-digit: Code allotted by each state to the registrant.

TAX PAYER'S IDENTIFICATION NUMBER (TIN)

VAT

CERTIFICATEDifferent Rates of VATRATEDESCRIPTION 1 %This category is meant for precious stones , precious and semi-precious metals , bullion, gold and silver ornaments , etc. 4 % This category covers item of basic necessities of goods such as medicines & all agricultural & industrial inputs . 12.5 % All goods other than the goods falling under aforesaid category & other than luxury goods. 20 % Luxury goods .E-filing of ReturnsWhat is E Filing?The process of submitting tax returns over the Internet,using tax preparation software that has been pre-approved by the relevant tax authority, such as E- Returns of Vat, Service Tax, Income Tax.E-filing has manifold benefits; the taxpayer can filea tax return from the comfort of home, at any convenient time E-filing of ReturnsProcedure To E-filing Vat ReturnA dealer is required to file returns periodically. Any dealer having taxable turn over of more than 1.0 crore is required to file his returns both manually in hard copy and online in soft copy.The Commercial Tax Department has launched a website with URL www.commercialtax.gujarat.gov.in. The web portal offers different kind of information on VAT in Gujarat.Operational Instructions: Procedure to file e-return is very simple. A computer with internet connectivity is required for the purpose. There are five easy steps to file e-return. These steps are: Step 1. Registration on the Website Step 2. Login.Step 3. Preparation for the return.Step 4. Uploading the return (.xls)Step 5. Acknowledgement.E-filing of ReturnsE-filing of ReturnsStep 1. Registration on the website:

To register on web site, connect to Internet and write URL in the address bar as under:http://www.commercialtax.gujarat.gov.in. Once the web site is connected the Home page will appear as shown below(screen 1)On the left hand corner of the home page there is a sign- up link. Please click on it.

A new screen will open. This screen displays the details required to be filled by the dealer for registering on the web portal. Please enter the details on the screen.

E-filing of ReturnsStep 2. Login A dealer registered on the web site is required to Login for the purpose of filing e-return. Connect to Internet and open the website http://www.commercialtax.gujarat.gov.in. Home page, there is a column on left hand side as indicated in screen 3.

To fill up the return, you are required to download the templates from the website. It is advisable to download these templates once and store for future use. To download the templates for filing e-Returns, just click on required form name (template) as mentioned in the below table.Sr. No.Document TypeMandatory/OptionalUpload Format to be uploaded1.Form 201Mandatory.xls2.Form 201AMandatory.csv3.Form 201BMandatory.csvStep 3 Preparations for the Return: After downloading requisite templates, data can be entered in these templates in following steps:

Open downloaded templates and fill the template with appropriate data.Enter the kind of data as per the color shown in the background. The color scheme is:Light Green => Only integers are to be entered in the cell.Dark Green => Only select data from the displayed list only.Light Blue => Only characters are to be entered in the cell.Orange => Only dates are allowed to be entered in the cell. Pink =>Only characters and integers are to be entered in the cell.E-filing of ReturnsForm201 Download Form201.xls file and save it in your local machine. Open using Microsoft Excel and fill the required details and save the excel sheet.Following is sample template for Monthly Return Form 201

Form201A and Form201BDownload Form201A/Form201B .xls file and save it in your local machine.Open using Microsoft Excel and fill the required details.Following is sample template for Monthly Return Form 201A

If after, downloading templates, if you had logged out of the system, please log-in again and to upload filled templates

Step-4 Upload and submit the form:

E-filing of ReturnsStep 5 Generate the Acknowledgement Receipt:After successfully uploading base template (form 201) along with its attachments, (Form 201A, 201B , 201C), you need to generate acknowledgement receipt. On click of the button Generate Acknowledgement there will be a pop-up saying Once acknowledgement is generated, no more forms can be attached.E-filing of ReturnsOK button - Will generate the acknowledgement receipt. Once acknowledgement receipt is generated, you will not be allowed to file e-Returns for same period again.