Financial Daily from THE HINDU group of publications
Wednesday, Nov 13, 2002
Industry & Economy
Draft VAT law to be tabled in AP House
HYDERABAD, Nov. 12
THE Andhra Pradesh Government has started making preparations to get into the value-added tax (VAT) regime due to be heralded nationally from the next financial year and has come out with a draft VAT law called the "AP Value Added Tax Act 2003" for introduction in the Assembly in the current session.
Among the salient features of the draft are that the Government seeks to levy tax on sale or purchase of goods in the course of business at every point of sale. It provides for levy on some commodities at the point of purchase where goods are sent to other States other than by way of sale in conformity with the existing law.
Under the new law, dealers are classified into two categories, those who pay tax on turnover and those who are liable to pay VAT. Traders whose annual turnover is below Rs 2 lakh are exempted from tax liability. They may, however, register for VAT if they so desire.
The number of rates is reduced to two i.e, a lower rate of four per cent and a standard rate to be decided later. Gold and jewellery items are to be taxed at a special rate of 1 per cent. Inter-State sales and export sales are deemed as liable to tax at zero rate which means that inputs which suffered tax would become eligible for rebate or refund.
VAT dealers are liable to file returns on a monthly basis, while turnover tax dealers will have to file quarterly returns. A system of self-declaration is also provided for. The tax administration can identify potential cases for audit at taxpayers' premises.
As VAT system is invoice and account-based, taxpayers are expected to retain tax invoices and other business records for six years.
The law provides for relief on stocks held by dealers on the date of introduction of VAT if the goods are purchased three months before the commencement of the Act. Claims for tax relief on such goods have to be backed by relevant tax invoices. For dispute resolution, the current practices are retained.
The highlights of the proposed legislation are: dealers with a turnover ranging from Rs 2 lakh to Rs 20 lakh have to pay turnover tax. Those who crossed the Rs 20-lakh limit have to register for VAT.
Importers and exporters irrespective of their turnover have to register for VAT. Input tax credit is available on capital goods, raw materials, packing materials and consumables purchased in the State.
Input tax credit is given for local taxable sales in the State, sales in the course of inter-State trade and export sales. Bulk exporters and 100 per cent EOUs get the benefit of refund of input tax against their exports.
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