CA Umesh Sharma
Arjun (Fictional character): Krishna, From April 2016, Maharashtra Sales Tax Department has introduced new SAP system and brought various changes in VAT returns. Now bill wise details will have to be given for sales and purchase and many more changes are being made. So what is the procedure of filing returns and it’s impact on business?
Krishna (Fictional character): Arjuna, As the April month started, we saw excitement rising for the IPL 20-20. Like Cricket, now in the same way, the sales tax department until a few years ago had a system like Test cricket matches but now the new VAT system is just like the superfast IPL 20-20. In the past the sales tax returns were checked year to year ( slowly like test match), later on returns were checked TIN to TIN number (fast like one day match) and now they would be checked bill to bill (superfast like 20-20 matches). As in 20-20 cricket matches every ball to ball has to be played, same way the details of every bill to bill has to be provided now. For this, in Dealer’s innings i.e. return filling they will have to provide all details of purchase and sales billwise, Tinwise, Codewise and Return wise and for that Dealer should maintain proper and updated books of accounts. In reply, the sales tax department, on basis each return filed and on “Input Tax Credit Report” would automatically allow or disallow the set off return wise. Earlier, this disallowance was done through assessment or CDA notice. Thus superfast compliance is the need of the hour under the new system.
Arjun: Krishna, in this new return system what are the major conditions that the Dealers should follow?
Krishna: Arjuna, the major conditions the Dealers should know are as follows:
1. Earlier, the Dealers had to fill various forms like 231,232, etc under VAT, CST, J1 & J2 Annexures and submit them separately on the website of Department Of Sales Tax. But now all the forms are covered under one utility only.
2. There are no changes in the FORM type i.e. 231, 232, etc. through which the returns were submitted but J1 and J2 is replaced by Sales and Purchase annexures.
3. This utility consists of purchase and sales annexures. In this we have to fill details of purchase and sales Billwise, TINwise, Codewise and return wise and after validation the selected form will get automatically filled, which we can check later. Then we will have to manually fill some details in the return of Taxrate, Setoff retention, Payments, etc.
4. After uploading this file on the Sales Tax Department website, it will become a Draft Return, if the details in the return is agreed with, then we can submit it.
5. Dealer can find this utility of this return on the www.mahavat.gov.in website. Further Circular 7T of 2016, Step to Step Guide, FAQ on new returns is also published by the sales tax dept.
6. The responsibility of submitting correct and proper return will be solely of Dealers.
7. If the Draft Return is not agreed with, then the Dealer can make required changes or manually fill the required details.
8. Every Dealer will have to fill the purchase and sales annexure. Only the Dealer under composition scheme will not be required to fill the sales annexure.
9. Dealer filing Nil Return will also have to fill the sales and purchase annexure and submit the return.
10. Many dealers don’t show transactions relating to printing and stationery, repairs, staff welfare, etc. in the return. But now it is expected that all the Dealers will show these transaction in this utility.
11. No negative values can be fed either in the return or in the annexure.
12. Some Dealer like retails traders, restaurants, medical shops, etc. does hundreds of transactions in a single day and does not know the names of the customers, then sales can be mentioned on aggregate basis.
Arjun: Krishna, what will be the effect of this new system on the Dealers?
Krishna: Arjuna, the major effects of this new system on Dealers is as under:
1. Dealer will get set-off as per the purchase annexure submitted by him but if later the department comes to know that there is a difference between the purchases shown by the Dealer in the purchase annexure and the sales shown by the supplier in the sales annexure then the set-off will get automatically disallowed in next return.
2. To avoid this disallowance of set-off, the Dealer can make the required changes or get them done on the basis of “Input Tax Credit Report” before filing next period return.
3. For the purpose sale return transaction, confirmation of the purchaser will be required as aforesaid or in the next return, the same amount of VAT will be reversed.
4. For the purpose of purchase return, the confirmation of seller is not required.
5. In case of CST declaration forms like C-FORM,F-FORM etc will be given on the basis of the return filed only. Thus this new returns will reduce many formalities of application of C-Forms, etc.
6. In the works contract, the benefit of TDS will get credited in his account only when the contractee has filed his WCT return.
Arjun: Krishna, what one should learn from this new system?
Krishna: Arjuna, today life has become fast and technology based. Everyone wants each and everything immediately in their hands. Till now in the tax laws, the VAT returns would be assessed after 2-3 years and later legal proceedings would be carried out. Now after this new change, the major action would be taken soon, by which the tax evasion would be caught early and the transactions will be done with a genuine person. And also from now onwards the Dealer will have to be alert while doing business transactions. For this the Dealer will have to make various changes in his accounting software. As in IPL batsmen has to play Ball to ball to win it, to file correct and complete return, dealer will have to put sales and purchases details in return on Bill to Bill. Thus life of dealers will be now on superfast mode, before filing return all sales and purchase transactions needs to be closed and reconciled. Further whether the introduction of this new system had reach the Dealers, whether they have been trained or not and whether they will be benefited or not, only GOD KNOWS, otherwise it’s also true that only honest taxpayers are punished many a times!!