Sunday, June 21, 2015

Telangan Basic VAT Frequently Asked Questions (FAQ)


SOURCE:
www.tgct.gov.in

What is VAT?
Value Added Tax (VAT) is a form of sales tax. It is collected in stages on transactions Involving sales of goods. Tax paid on purchases (input tax) is rebated against tax payable on sales (output tax). VAT is levied on sales of all taxable goods. VAT is not levied if sales of goods are not made in the course of or in furtherance of business.

WHO SHOULD PAY VAT?
An individual, partnership, company etc., who sells goods in the course of business and who is registered or is required to register for VAT should pay VAT.

WHEN IS VAT CHARGEABLE?
VAT is chargeable if the sales of goods:
  • are made in the State of Telangana
  • are made by a VAT dealer in the State
  • are made in the course of or in furtherance of a business; and
  • are not specifically exempt or zero-rated.
WHAT ARE TAXABLE SALES?
Sales of goods made in / or from the State of Telangana, which are not exempt, are taxable sales. e.g., Sale of exempt goods (Schedule I) is not a taxable sale.
 
Sales are outside the scope of VAT if they are
  • made by someone who is not a VAT dealer; or
  • not made in the course of or in furtherance of business.
Pl note that Taxable sales also include ZERO-RATED sales ( For.e.g, Exports or Interstate sale)

WHAT OTHER TAXABLE SALES MAY BE LIABLE TO VAT?
Other than your normal business sales, you should also account for VAT on the Following sales:
  • Sales to your staff or sales from vending machines;
  • Sales of business assets (e.g. Equipment, furniture, commercial vehicles);
  • Sales under Hire-purchase agreement or lease of goods to someone else;
  • Works contracts
ARE THERE ANY OTHER KINDS OF SALES?
Apart from taxable sales, there are sales that the Value Added Tax Act, 2005 specifies as exempt.

WHAT IS THE DIFFERENCE BETWEEN EXEMPT AND ZERO-RATED SALES?
With both zero-rated sales and exempt sales you don't charge VAT.
However, for zero-rated sales you are eligible to claim a tax credit for the input tax paid on your purchases;

(Example: If a dealer is making exports, he is eligible to claim Input tax on purchases made within the state, subject to conditions)
 
Whereas for exempt sales you are not eligible to claim a tax credit for the input tax paid on your purchases relating to such exempt sales

WHAT IS OUTPUT TAX?
It is the VAT chargeable on all the taxable sales made by a VAT dealer

WHAT IS INPUT TAX?
It is VAT charged on your purchases of goods. If you are registered for VAT you can normally claim a credit for the VAT charged on most business purchases.

What is Taxable Turnover?
Taxable turnover is the aggregate total of sale prices of all taxable goods including goods taxable at zero rate. Sale price of goods and transactions exempted and VAT charged on taxable sales do not form part of Taxable Turnover.

What is the VAT liability of branch transfers and Consignment sales?
Such transactions are exempt from VAT liability, but you are eligible to claim an input tax credit for the tax paid in excess of 4% on inputs.In inputs are purchased at 4 % Vat, then you are not eligible to claim ITC for this amount.
  • Sole Proprietor
  • Partnership
  • Private Company
  • Public Company
  • Government Enterprise
  • Club, Society or Association
  • Hindu undivided family
What is meant by the term" DEALER" as per APVAT ACT?
The term "any dealer" for the purposes of VAT registration includes:

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