NOTE ON PAYMENT OF ADVANCE TAX UNDER THE PUNJAB VAT ACT 2005.

The Punjab Government has introduced the new tax i.e. Advance Tax by making an amendment in the Punjab Value Added Tax Act, 2005 on the import of the certain goods in the State of Punjab. The advance tax is attracted on 30 items the list of the same is enclosed for your kind reference as earlier entry tax was attracted on 26 items but by introduction of advance tax, the govt. has increased the list by adding 4 more items i.e. Wheat, Rice, Paddy and Copper in all its shape and forms including copper scrap.

Certain conditions are added for levy and exemption of advance tax but the notification is totally silent regarding the Section or Rule:

(1) Who imports the said goods into the state, shall pay the said tax, on the presumption that such goods are meant for the purposes of sale or for use in manufacture or processing of goods meant for sale unless, it is proved otherwise by such taxable person. It is further presumed unless, it is proved otherwise by such taxable person, that such goods or any product manufactured therefrom shall not be sold below the price at which such goods have been purchased and imported in the state.

(2) Who intends to dispose of such goods, in any of the following manner, namely

(a)  In manufacturing of any tax free goods as given under section 16 of the Act; or

(b) By sending them outside the state, other than by way of sale in the course of interstate trade or commerce or in the course of export out of India; or

(c)  In manufacturing or in packing of taxable goods sent outside the State, other than by way of sale in the course of interstate trade or commerce or in the course of export out of India; or

(d) By making zero rates sales as given under section 17 of the Act, of such goods , or of the goods manufactured therefrom,

He may make an application to the Designated Officer who if after verifying all aspects of the case, arrives at a decision that the payment of the aforesaid tax, would result in refund, may exempt such taxable person from the payment of the said tax or reduce the rate of advance tax, with the approval of Deputy Excise & Taxation Commissioner, in-charge of the concerned division, by passing speaking order in this regard.

Procedure for making the Payment of Advance Tax

1. Just like the dealers used to do in the case of Entry Tax, they will be able to deposit the  Advance Tax at the ICCs. For this an entry will be made in the computer system at the ICC.

2. In addition to above, the dealers will be able to deposit the Advance Tax in the office of AETC as well as through internet banking.

3.     Procedure for depositing the Advance Tax in the office of AETC:

a. If a dealer frequently imports goods in to the State, he may deposit a lump-sum of Advance Tax in the office of AETC.

b. For this purpose the dealer may make payment through challan in form VAT 2 under subhead ‘Advance Tax’ (0040-00-111-01).

c. Once a dealer has made the payment in the Treasury in the above sub-head, he will present the receipt at the front window at AETC office. The AETC office will immediately enter the amount of Advance Tax into the credit of the dealer in the computer system.

d. Thereafter whenever the dealer presents any goods at any ICC, the system will automatically work out the Advance Tax due and deduct that amount from the lump-sum already deposited by the dealer. The dealer/ driver will be given a receipt showing the advance tax deducted on account of that import.

4.  Procedure for payment through internet banking:

a. In order to make the facility of payment of Advance Tax 24×7, the Department has developed a software and tied up with following seven banks:

i. ICICI bank

ii. HDFC bank

iii. Punjab National Bank

iv. Kotak Mahindra

v. Axis Bank

vi. Bank of Baroda

vii. Canara Bank

b. For availing this facility, the dealer may visit the website of the department www.pextax.com and open the VAT 2 challan and fill up the details in the sub-head “Advance Tax” (0040-00-111-01).

c. The dealer can do so either through his log-in or through facility of open payment.

d. After the challan details are filled, the dealer or the person making the payment will be routed to the bank website where he can make the payment of the advance tax. His ledger with the Department will be updated post successful transaction.

e. Thereafter whenever the dealer presents any goods at any ICC, the system will automatically work out the Advance Tax due and deduct that amount from the lump-sum already deposited by the dealer. The dealer/ driver will be given a receipt showing the advance tax deducted on account of that import.

By virtue of this notification, Government has levied the advance tax on certain items by granting exemption to taxable persons from entry tax in other words we can say that Govt. has replaced the name of entry tax to Advance tax so that taxable persons cannot avail the benefit of deferment of entry tax granted by the Hon’ble Punjab & Haryana High Court. Here it is pertinent to point out that Govt. has introduced the clause for exemption from advance tax on certain categories which are discussed above but the procedure prescribed is not effective as neither the time limit is prescribed for passing the order nor the list of relevant documents required for availing the exemption is prescribed which clearly reflect that officers were granted discretionary powers to grant exemption certificate which will result in harassment to the persons who falls in the category of exemption. 

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Authored by

J S BEDI Advocate

Email ID: bediadvocate@yahoo.co.in

Contact Number: 98140-66336

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One response to “Advance Tax Payment Under Punjab VAT Act,2005”

  1. amarpal singh says:

    if i purchase a material from punjab (VAT purchase) and send it to chandigarh (outside punjab) for job work/processing, do i need to pay advance tax while receiving back the material in punjab after processing/jobwork. if ‘NO’ then whats the process to avoid the unnecessary tax deposit.

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