CA Viral K. Chheda

The Maharashtra State Budget, 2016 was announced on 18/03/2016 . Several amendments were suggested in the said budget. I have tried to explain the current & proposed position of the law for better understanding. To Err is human. Suggestions, views, objections etc are most welcome from the readers, for increasing my knowledge in the subject.

I have tried to summarise the budget proposals chapter wise. Following is the chapter wise agenda to this article:

  1. Amendment in Registration Procedure
  2. Amendment in Returns
  3. Amendments in Assessment Proceedings
  4. Amendments under WCT provisions
  5. Amendments under Composition Scheme u/s 42
  6. Changes in Schedule Rates & increase in rate of MVAT
  7. Amnesty Scheme Under Profession Tax Enrolment
  8. Amnesty Scheme for dues under acts administered by the Sales Tax Department.

Chapter 1: Amendment in Registration Procedure:

Realizing the use and benefits of Computerization, which is essential ingredient for providing better & efficient services to trade & industry, Sales Tax Department has prepared itself to adopt SAP based system.

Existing ProvisionProposed Provision
Dealer is not required to attend personally before the Registering Authority.

He has to just upload the scanned copy of all the required documents & obtain his registration without visiting the sales tax department.

However, in case the documents are not in order or if there is any other defect than the Registering authority had full power to reject the same without giving the reasonable opportunity of hearing.

This would lead to multiple repeated uploading of same application for registration and also creates room for litigation for WEF date of grant of tin certificate.

Dealer is not required to attend personally before the Registering Authority.

He has to just upload the scanned copy of all the required documents & obtain his registration without visiting the sales tax department.

It is proposed further to give the opportunity to dealer to clear the defect within stipulated period accorded to him.

Thus if there is any defect in application, then instead of rejecting the said application, registering authority will have to give the dealer a reasonable time to rectify the defects.

If the defects are rectified within a period granted than the registration certificate will be granted with effect from the date as applicable for original registration application made.

Example:

If dealer is liable to get registered on 01/03/2016 and application is made within 30 days, say on 15/03/2016 & if there is a defect in the application than under the proposed provision, registering authority has to give reasonable time & opportunity to dealer to rectify the defect. Say the authority has given a time to rectify the defect upto 30/03/2016 & if dealer recifies the same before 30/03/2016, than the TIN certificate will be issued wef 01/03/2016. Dealer is not required to make fresh registration application.

Chapter 2: Amendment in filing of revised returns:

From F.Y. 2016-17 onwards, all the registered dealers are required to file invoice wise details of sales and purchases in the return annexures J1 & J2 as per circular 7T of 2016 dated 25/02/2016. The Department is going to review periodically the annexures filed by various dealers & will intimate the mismatch of set off. On receiving the intimation of mismatch, concerned dealers (whether buyer or seller) may recity returns & its annexures appropriately.

Existing ProvisionsProposed Provision
Dealer is allowed to file revised returns only once u/s 20(4)(a).It is proposed that dealer will be allowed to file multiple revised returns.

The proposed time limit for filing of revised returns will be till the due date of filing vat audit report.

Chapter 3: Amendment is Assessment Proceedings:

Section 23 of the MVAT Act, 2002 envisages the detailed provision on assessment proceedings. (Tabular presentation of assessment proceedings under MVAT Act is already available readily in Taxguru.com for the benefit of readers).

Self Assessment is one of the main objective of MVAT Act. Not all the cases are selected for complete assessments. It is selected on the basis of certain criteria`s. Since the self assessment is one of the important objective of MVAT Act, it is proposed to move a step ahead on the path of Self assessment.

Existing ProvisionProposed Provision
 

There is no provision for issuing Return Acceptance Order under existing provision of MVAT Act.

The dealers who have filed returns within the stipulated period & to whom no notice for assessment is served than it is proposed to issue Returns Acceptance Order to the dealer after the expiry of four years.

It is also proposed to issue confirmation order of acceptance of revised returns, if during the course of assessment, dealer is intimated proposed tax and interest liability and the same is accepted & paid by the dealer.

Example:

Say Mr. X’s, (dealer) case is selected for assessment for F.Y. 2012-13. But no notice for assessment is received by him for F.Y. 2011-12, till the expiry of period of 4 years i.e. 31/03/2016. In this case, the claims of the returns filed for F.Y. 2011-12 will be accepted and accordingly Returns Acceptance Order will be issued after expiry of 4 years. If there is a carried forward of credit of vat from F.Y. 2011-12 to 2012-13, than it will be allowed on the basis of the said acceptance order. The dealer will not be required undergo assessment proceedings for F.Y. 2011-12 also.

Chapter 4: Amendments under WCT Provisions:

Existing ProvisionProposed Provision
 

There is no mechanism to transfer the credit of WCT TDS from Contractor to Sub Contractor.

It is proposed in the budget that contractor dealer will be allowed to transfer the credit of WCT TDS to Sub Contractor.

Also proposed that employer liable to deduct WCT TDS will have to obtain TDS Number under the act.

Chapter 5: Amendment under Composition Scheme u/s 42:

Eligible DealersExisting ProvisionAmended provision from 01/04/2016
• Restaurants

• Eating Houses

• Refreshment Rooms

• Boarding Establishments

• Factory Canteen

• Clubs

• Hotels

• Caterers

All the Registered eligible dealers were liable to pay VAT at the rate of 5% without any limit of turnover.For Registered Eligible dealers:

a) If turnover of Sales is less than 3 Crores in previous year, rate of compositon VAT tax is 5%,

b) If turnover of Sales Exceeds 3 Crores in previous year, rate of composition VAT tax is 8%

For Unregistered Eligible Dealers:

Rate of composition VAT tax remains unchanged at 10%

 

• Bakers

In order to opt for composition scheme for bakeries, the turnover of tax free goods like breads, etc were also included while calculating the limit of total turnover of 50 LacsIt is amended that to opt for composition scheme for bakeries, the turnover of tax free goods like breads, etc shall not be included while calculating the limit of total turnover of 50 Lacs
 

• Retailers

Under the existing provision, in order to opt for composition scheme of retailers, the turnover of sales was required to be below 50 Lacs.

Turnover below 50 Lacs were eligible for benefits of composition scheme.

 

The yearly turnover limit is increased from 50 lacs to 1 crore

Chapter 6: Changes in Schedule Rates & Increase in rate of MVAT:

A. GENERAL AMENDMENTS:

In order to meet the distress faced by the farmers, the rate of MVAT was increased for temporary period (upto 31/03/2016) on certain items viz. Petrol, Diesel, IMFL, Country Liquor, Cigarettes, Cold Drinks, Gold, Diamonds, Jewellery from 01/10/2015, as per Notification no VAT 1515/CR 128A/Taxation 1, Dated 30-9-2015.

It is proposed that the increased rate of tax will remain same for one more year i.e. till 31/03/2017.

a. Enhancement of rate of tax of goods covered under Schedule C, other than declared goods from 5% to 5.5%. It is applicable from 01/04/2016 vide notification no. VAT.1516/CR31/Taxation-1, issued on 30/03/2016.

b. The exemption of tax on Essential Commodities like rice, whet, jowar, bajra, pulses and their flour, turmeric (haldi), chillies(Mirchi), tamarind, jaggery (gur), coconut, coriander seeds (Dhaniya), fenugreek (Methi), parsley (Suva), Papad, Wet Dates (Khajur), Solapuri Chaddars, Currant(kali Draksh) and raisins, is extended till 31/03/2017.

B. SPECIFIC AMENDMENTS (Commodity wise rate):

CommodityExisting RateAmended Rate (Applicable from 01/04/2016)Remarks
• Coconut Hair Oil5%12.5%New rate applicable if sold in package of less than 500 MM.
• Terry Towels0%5.5%Nil
• Sweet CornDisputed in courts5.5%Nil
• Barbed Wires

• Wire Mesh

• Chain Links

12.5%5.5%To encourage Farmers
• Cotton Seed0%2%Nil
• Battery Operated and hybrid buses5%0%If bus purchased by Public Transport Undertakings
• Pyrolysis Oil12.5%5.50%Nil
• LED Tubes12.5%5.50%In line with LED Bulbs, which were brought to tax at 5% last year.
• Pencil Box

• Gums

• Glues Sticks

• Stapler Pin

• Tape Dispenser

• Duster

• all types of file

12.5%5.5%Nil
• Retrofit Kit used in vehicles of disabled person12.5%0%Nil
• Sales of confiscated vehicles by banks and financial institutions12.5%5.5%Sales Tax or Entry Tax should be paid at early stage.
• Sterile Water12.5%5.5%Nil
• Mamography Machine for Breast Cancer Detection12.5%0%Nil
• Handicraft Products of Bamboo5%0%All Bamboo handicraft products are exempted except Bamboo Furniture

Chapter 7: Amnesty Scheme for Profession Tax Enrolment:

Amnesty Scheme for Profession Tax Enrollment is proposed to encourage unenrolled person to apply for enrolment.

Existing ProvisionProposed Provision
Liability of unenrolled person extend upto maximum 8 yearsAmnesty scheme is proposed wherein if the unenrolled person enrolls himself from 01/04/2016 to 30/09/2016 than he will be required to pay profession tax & corresponding penalty for period not exceeding three years prior to application.

Thus the period of 8 years is replaced with 3 years under amnesty scheme.

PLEASE NOTE THAT THE ABOVE SCHEME IS ONLY FOR PTE & NOT FOR PTR (EMPLOYER’S PT NUMBER).

Chapter 8: Amnesty Scheme for Dues under Acts administered by the Sales Tax Department:

In order to decrease the disputes of the various appeals pending before the various forums, it is proposed to frame the amnesty scheme. It is proposed that a dealer who has filed an appeal & recovery of disputed dues is stayed by the appellate authority, can avail a benefit of the amnesty as under:

Period upto 31/03/2005From 01/04/2005 to 31/03/2012
 

If the dealer pays the disputed tax amount in full, than no interest & penalty is required to be paid.

If dealer pays disputed tax amount alongwith 25% interest, the balance interest & penalty will be waived.

Amnesty will be available from 01/04/2016 to 30/09/2016. Dealer will also have to withdraw the appeal.

JAI HIND – JAI MAHARASHTRA

(Author can be reached atviiralca@gmail.com)

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