CA Umesh Sharma
Arjun (Fictional character): Krishna, this year from April 2016 onwards the Maharashtra Sales Tax Departments has brought various small amendments in the VAT system. Because of these changes the small dealers covered under the composition scheme have great responsibility and such changes have a great impact. So what is the impact of such changes?
Krishna (Fictional character): Arjuna, This year Sales Department with full of Information Technology backup and enthusiasm has come up with various changes in the VAT system to collect more data and revenue. The changes introduced by the department for the dealers covered under composition scheme shall be applicable from the 1st of April. Dealers covered under composition scheme are those, who have small businesses like retailers having annual turnover of less than Rs.1 Crore, bakers, restaurant dealers etc. They are not required to maintain books of account, Setoff on Purchases is not allowed, also cannot issue tax invoice and calculation of VAT in such cases is simple and easy, along with further conditions. But there are various changes introduced in the return filing system and also under composition scheme thus having a large impact on the dealers.
Arjun: Krishna, What are the changes made for the small dealers under the composition scheme?
Krishna: Arjuna, In MVAT, depending upon the type of the business there are different composition schemes. And under such composition schemes various amendments have been made which are as follows:
1. The dealer being a retailer, having the annual turnover of Rs. 50 Lakhs in previous year, had an option to opt for the composition scheme. Now this limit of Rs.50 Lakhs has been increased to Rs. 1 Crore.
2. Dealers running restaurants and covered under composition scheme had uniform VAT rate of 5%. Now taxation of these dealers is divided in three parts. If annual turnover in previous year is Rs 3 Crore then VAT rate would be 5%. If the annual turnover is more than 3 Crore then the VAT rate applicable would be 8% and for unregistered dealer rate of VAT is 10%.
Arjun: Krishna, what will be the effect of this new system of return filing on the small dealers?
Krishna: Arjuna, the effect of changes due to new system of return filing is as under:
1. Every dealer covered under the composition scheme will have to file MVAT return quarterly. Earlier, small dealers had to file the VAT return six monthly i.e twice in the year.
2. From April 2016 onwards, every dealer shall provide bill wise details of both purchases and sales. Under the new return, dealers covered under composition scheme shall be liable to fill the purchase annexure but are not required to fill the sales annexure.
3. Dealers under composition scheme shall file return under the FORM 232. Separate annexure of it needs to be filed. It cannot be merged with other return types in new return excel file template.
Earlier for filing six monthly returns, returns had to be filed before 30 days and also 10 grace days were provided for 4. filing the return. Now all returns will have to be filed on or before 21st of succeeding month from the end of month or quarter.
5. If VAT audit is not applicable to the dealer and if he has not opted for composition scheme, then after completion of financial year he will have to submit annual annexure before 30th But now the same is to be given after completion of year before 21st April.
6. For this, the dealers have to maintain proper and correct books of accounts and also need to follow the rules applicable.
Arjun: Krishna, what one should learn from these changes?
Krishna: Arjuna, whether the dealer is small or big, following the rules and regulation is of utmost importance. Due to the new changes introduced, the small dealers will be facing various problems but this scheme is pre-planned and is the first step towards implementation of GST. Under this, besides finding the faults and errors in the new system, the dealer should implement such policy from today so that the dealer will be benefited. If proper books of accounts are maintained, the dealers won’t face many problems. Care needs to be taken before issue of Invoice as later on after filing return it will be cumbersome to change it.