Indirect Taxation. Part I – Value Added Tax. Value Added Tax. A state tax Imposed through State legislature enactments An Indirect Tax on sale of goods Goods sold within the State Responsibility of the Seller to collect the tax and pay it to the State VAT Act does not apply to
Value Added Tax • A state tax • Imposed through State legislature enactments • An Indirect Tax on sale of goods • Goods sold within the State • Responsibility of the Seller to collect the tax and pay it to the State • VAT Act does not apply to • inter-state sale • Export or import of goods
Registered Dealers • The Act taxes all sale transactions of ‘dealers’ within the State • The dealers whose turnover exceeds a turnover of Rs. 5 lakhs a year are required to register for application of VAT • Dealer broadly covers every one who is buying and selling goods in relation to business • Depending upon the turnover of the dealer, the taxes are deposited with the State either on • Monthly basis; or Quarterly basis: or Half Yearly basis.
Output and Input tax • Output tax: • The tax liability of the Dealer for a period, month or quarter, is required to be calculated taking into account each sale and rate of taxation for that goods • Input tax: • The VAT paid by the Dealer on the purchases with adequate documentation supporting the payment of tax