Tamil Nadu VAT Audit
Introduction:
The Legislative
Assembly of the State of Tamil Nadu in the 57th
Year of the Republic of India had formulated the Act and Rules consolidating and amending the law relating to the levy of
tax on the sale or purchase of goods in the State of Tamil Nadu. The Act so formulated is
the Tamil Nadu VAT Act 2006 and the Rules
formulated by the Government of Tamil Nadu is the Tamil Nadu VAT Rules 2007. Applicability:
The Act
and the Rule has come into force on January 1, 2007 and it is applicable to the
whole State of Tamil Nadu.
Tamil Nadu Vat Act 2006:
As per this Act every dealer shall pay tax at the rate specified on every sale of the goods specified in the First Schedule.
Every dealer dealing in goods subject to VAT, is eligible to deduct the tax paid on purchases (input tax) from the tax payable on sales, subject to the conditions prescribed.
Tamil Nadu Vat Audit:
Section 63 A – TNVAT Act, 2006
Subject
to the Circular No. 09 / 2012 Dated 14th September, 2012 issued by the Department, a new Section 63-A
to TNVAT Act, 2006 has been introduced by the Act No.18 of 2012.
As per
this Section a registered dealer has to get his accounts audited by an
accountant if the total turnover of the dealer including zero rate sale and sale
in the course of inter-state trade or commerce as specified in section 3 of the
CST Act, 1956 exceeds one crore rupees in a year.
The
Accountant here includes a Cost Accountant or a Chartered Accountant.
Applicability: The TNVAT Audit is applicable from the FY 2012-13.
Rule 16 A of the TNVAT Rules, 2007
Rule 16A
of TNVAT Rules, 2007 was formulated to provide the procedure for filing the Mandatory Audit Report with the Commercial
Taxes Department.
As per this every registered dealer liable to get his accounts audited as provided under sub-section (1) of section 63 A shall furnish the audit report in Form – WW within 7 months from the end of the year in duplicate.
The following information has to be provided along with the Form WW (Audit Report U/S 63-A of the Tamil Nadu Value Added Tax Act, 2006):
- Summary of the additional tax liability or additional refund due to the dealer as on the date of the audit for the year.
Annexure:
o
Part
A – General Information
o
Part
B – Computation of Turnover Assessable under the Tamil Nadu Value Added Tax
Act, 2006
o
Computation
of Purchases.
o
Details
of Input Tax Credit Reversal / Adjustment
o
Turnover
under the Central Sales Tax Act, 1956
o
Details
of Input Tax Credit availed on purchase of Capital Goods (Other than parts and
accessories)
o
Total
input tax credit on Capital goods
o
Details
of delayed filing of returns / payment of taxes
o
In
case of trading concerns other quantitative information
The Notice for the levy of penalty / Interest will be issued in Form RR
Budget 2013
The below note covers the following areas:
- Predictions of Budget 2013
- Expectations by Companies
- What a Common Man wants out of the budget 2013.
A. PREDICTIONS OF
BUDGET 2013:
While preparing the Budget the following points would be
considered.
-
Macroeconomic
issues – ie. deficits, inflation, interest rates, savings and investment, which includes the
flow of foreign funds - FII and FDI.
-
Prior
to last year’s Budget 2012-13, India
was battling high inflation at 9 percent, fiscal deficit at 5.9 percent of GDP
and a current account deficit (CAD) at 4.2 percent of GDP. And Prior to this
year’s Budget though we find that the inflation has eased, fiscal deficit at
5.3 percent of GDP and CAD at 4.6 percent of GDP does not augur well for the
economy. Also, the consumer price index remains high due to food inflation
The Budget may
focus on the following:
Positive Items
|
Unenthusiastic Items
|
|
a. Steps may be taken to raise government revenues from direct
taxes by means of increasing the tax base. As a result more services may be
brought into the tax net and also the excise duty may be increased
selectively.
b. There could be an introduction
of an inheritance tax.
c. Steps may be taken to curb gold imports.
d. Government Expenditure may be curbed by
means of cuts in defence, railways and in other ministry budgets. Latest
reports suggest he may cut the public spending target by about 10 percent.
(This increased the cost of living).
e. The government may be trying to mobilize
additional tax revenues.
|
B. (1) EXPECTATIONS FROM
COMPANIES:
Auto industry hopes for excise
duty cut on small cars to 10 percent from 12 percent
o
Budget
may impose additional duty on diesel cars and utility vehicles
o
Roadmap
expected for capital infusion into state-owned banks
o
IT
services providers hope for clarity around transfer pricing norms, foreign tax
credit and refund of service tax claims
o
Telecommunications
companies lobby for reduction in levies and tax breaks
o
Real
estate sector wants tax concessions and other fiscal benefits to builders,
financiers and buyers of affordable housing
o
Retail
and consumer goods companies want industry status and an independent ministry
set up for retail as well as a cut in rate of service tax on commercial
property rent
o
Budget
may propose increase in excise duty for cement makers
o
May
remove import duty on thermal coal and introduce tax-free bonds for power
sector.
B. (2) OTHER
EXPECTATIONS:
(i) Inverted duty structure for
manufacturers of IT products. The impact of inverted duty structure is that it
effectively makes direct import by end- customers or trading (i.e. import and
sale) of IT products advantageous in comparison to manufacturing of IT products
in India.
(ii) Nil rate of CST against Form
C purchases of ITA products manufactured in India
It is recommended that sales of ITA bound products manufactured in India for subsequent sale (i.e. resale) against Form C be taxed @ 0% so that manufacturing is not placed in a disadvantageous position vis-à-vis trading/direct imports. For example, if manufacturing units are located in one State, the manufactured products attract a CST at 2% in inter-state sales, while traders/direct importers import the goods into the State of consumption and totally avoid the CST cost, thus putting domestic manufacturing at a disadvantage.
It is recommended that sales of ITA bound products manufactured in India for subsequent sale (i.e. resale) against Form C be taxed @ 0% so that manufacturing is not placed in a disadvantageous position vis-à-vis trading/direct imports. For example, if manufacturing units are located in one State, the manufactured products attract a CST at 2% in inter-state sales, while traders/direct importers import the goods into the State of consumption and totally avoid the CST cost, thus putting domestic manufacturing at a disadvantage.
(iii) Removal of Basic Customs
Duty on IT accessories. Given that such accessories such as adapters, battery,
laptop carry bags, speakers form critical parts of the main IT product,
imposing custom duties on the same increases the cost in the hands of the
manufacturers (and disincentivises manufacturing), which impacts the pricing to
end-customers.
(iv) Enhancement of MRP abatement.
Considering the prevalent rates of excise duty, sales tax in addition to
logistics/transportation costs and dealer margins, we recommend that this
anomaly should be corrected by increasing the abatement from existing rate to
40% on IT products.
C. WHAT A COMMON MAN WANTS OUT OF THE BUDGET 2013.
TAX EXEMPTION
With rising inflation hitting pockets hard, raising the
tax exemption limit to 300,000 rupees from 200,000 rupees would leave more
disposable income in the hands of taxpayers, particularly those in the lower
income bracket.
INVESTMENT LIMIT
The Income-Tax Act provides for a
deduction of up to 100,000 rupees for certain investments/expenses such as
retirement funds and insurance payments. In the absence of state-funded social
security schemes, it is important for people to secure their post-retirement
life. Increasing the limit to 300,000 rupees will encourage such investments.
Further deductions like Section 80CCF (investing in infrastructure bonds) are
also welcome as apart from encouraging savings, they also enable the government
to direct the funds to priority sectors.
HOUSE LOANS:
Every Indian dreams of owning a house. But while property
prices are soaring, the interest deduction of 150,000 rupees on self-occupied
property is too low. The limits should be increased to 500,000 rupees.
HEALTHCARE
The rising cost of medical care is hurting the common man. Raising the exemption limits for reimbursement of medical expense to 75,000 rupees from 15,000 rupees should provide some succour. The deduction limit under section 80D for health insurance premiums should also be increased to 50,000 rupees from 15,000 rupees with more and more people opting for health insurance
The rising cost of medical care is hurting the common man. Raising the exemption limits for reimbursement of medical expense to 75,000 rupees from 15,000 rupees should provide some succour. The deduction limit under section 80D for health insurance premiums should also be increased to 50,000 rupees from 15,000 rupees with more and more people opting for health insurance
ALLOWANCES
While conveyance and education expenses have surged, the exemption limits haven't kept pace. These limits should be increased in proportion to the amounts spent.
While conveyance and education expenses have surged, the exemption limits haven't kept pace. These limits should be increased in proportion to the amounts spent.
STANDARD DEDUCTION
Salaried employees incur various expenses for upgrading their skill sets. But they are not allowed deduction of any expenses incurred during employment. A standard deduction up to 30 percent of salary with an upper limit of 75,000 rupees should be provided.
ESOPs
Employee Stock Option Scheme (ESOPs) issued free of cost or at concessionary rates are taxed on the difference between fair market value and the amount actually paid by the employee. Levy of income tax on date of exercise creates a liability on the employee to pay tax on gains which are purely notional. Such taxation makes ESOPs less lucrative. Since ESOPs are a critical, motivational and retention tool for companies to retain talent, they should be taxable only on sale of shares.
Employee Stock Option Scheme (ESOPs) issued free of cost or at concessionary rates are taxed on the difference between fair market value and the amount actually paid by the employee. Levy of income tax on date of exercise creates a liability on the employee to pay tax on gains which are purely notional. Such taxation makes ESOPs less lucrative. Since ESOPs are a critical, motivational and retention tool for companies to retain talent, they should be taxable only on sale of shares.
REFUNDS
Revenue authorities need to ensure taxpayers get refunds and tax credit on time. This will encourage more Indians to pay tax.
Revenue authorities need to ensure taxpayers get refunds and tax credit on time. This will encourage more Indians to pay tax.
SECURITIES
TRANSACTION TAX:
The current Securities Transaction Tax (STT) is seen as a
stumbling block for institutions as well as reluctant individual investors in
the equity market and they have been demanding a reduction. This could be met
to an extent to boost the investment sentiment but could be balanced with the
introduction of a Commodity Transaction Tax (CTT). This could be a tool to curb
excessive speculation and bring in transparency in commodity transactions.
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Budget 2012-13
Impact of the budget
2012-13 on the Jewellery Industry
When gold is being purchased by
the individual the economic position of the individual improves keeping the
economic position of the country stagnant as the amount gets locked with the
individual alone. In order to float the liquid fund in the market the
Government would have doubled the tax on the Jewellery.
The question if people would still
purchase gold even if the prices increase would be answered in a few days/
months.
The budget 2012-13 has been un
favorable to the Jewellery Industry in general although the impact on Silver
can not be said to be negative. The following points would draw you closer to
the above said statement.
Sr No
|
Duty (Notified
with effect from March 17, 2012)
|
Existing
2011-12
|
Proposed in the
budget 2012-13
|
I
|
Customs Duty :
|
||
On
standard gold bars; gold coins of purity exceeding 99.5 per cent
|
2%
|
4%
|
|
Platinum
|
2%
|
4%
|
|
Non-standard gold
|
5%
|
10%
|
|
Cut and polished,
coloured gem stones at par with diamonds
|
2%
|
||
Gold ore,
concentrate and dore bars for refining and manufacturing gold
|
1%
|
2%
|
|
II
|
Excise Duty
|
||
Excise duty on branded
and unbranded precious metal jewellery:
·
This duty is
charged on tariff value equal to 30
per cent of the transaction value.
·
Small-scale
exemption up to annual turnover not exceeding `1.5 crore for units having a
turnover below ` 4 crore in the previous year.
Ø To compute turnover on the basis of tariff value
·
To place the onus
of registration and payment on the person who gets jewellery manufactured on
job-work
Note: Excise duty on jewellery is being imposed without
CENVAT credit,
|
1%
only for branded precious metal jewellery
|
1%
for all the precious metal jewellery
|
|
Refined gold
|
1.5%
|
3%
|
|
DTA [Domestic Tariff Area]
clearances of plain gold jewellery manufactured by an EOU (Export Oriented
Units)
|
5% ad-
valorem
|
10% ad valorem
|
|
Serially numbered gold bars
, other than tola bars and gold coin of purity not below 99.5% manufactured
during the process of copper smelting
|
2%
|
3%
|
|
III
|
TCS (Tax Collection at Source)
|
||
Any
purchase of bullion or jewellery in cash in excess of 2 lakhs is taxable.
|
Taxable
|
||
BENEFIT:
- Gold coins of purity 99.5% and above and silver coins of purity 99.9% is exempted from Excise duty.
- The Silver jewellery is exempt fully from Excise duty
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Deduction under 80CCF – Is it still available
It seems as if we have lost the
advantage of claiming deduction under Section 80 CCF as the Budget 2012 nor the
Direct Tax Code specifies the adopting of Section 80 CCF for the coming year
also.
Point to note: This deduction under section 80 CCF is not applicable
from the Financial year 2012-13.
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