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In the rush of GST Take Care of MVAT Audit

GST has been applicable from 1st July but Sales tax department has issued notification regarding VAT Audit on 8th December. Please explain in details regarding VAT Audit.

CA Umesh Sharma

Arjuna (Fictional Character): Krishna, GST has been applicable from 1st July but Sales tax department has issued notification regarding VAT Audit on 8th December. Please explain in details regarding VAT Audit.

Krishna (Fictional Character): Arjuna, although the GST has been applicable, the taxpayers of Maharashtra to whom the VAT Audit of financial year 2016-17 is applicable, they have to do Audit and file the report. Similarly, from April 2016, the monthly returns are to be filed bill wise. The taxpayers who are registered in April 2016, were not allowed to file VAT Audit report on the website. But by the notification issued on 8th December, it is now allowed.

Arjuna (Fictional Character): Krishna, to whom the VAT Audit applies?

Krishna (Fictional Character): Arjuna, by considering the Annual Turnover, the dealer has to file VAT return and it is decided whether to conduct VAT Audit or not. If the Annual Turnover exceeds Rs. 1 Crore then the dealer has to conduct VAT Audit compulsorily. In Audit by solving the problems it is checked whether the Returns are filed properly according to books of accounts or not. Many times the dealer gets trapped because of improper maintenance of Books of Accounts.

Arjuna (Fictional Character): Krishna, What is the most important thing in VAT Audit Report?

Krishna (Fictional Character): Arjuna, in VAT Audit the important is compliance of Law and accordingly annexure J1, J2 of VAT audit report. In Annexure J1 the dealer has to mention customer wise annual sales, VAT on such sales along with TIN numbers. Similarly in Annexure J2 the dealer has to give details of supplier wise purchases, VAT on them along with TIN numbers. If this information is submitted wrongly then the VAT authorities will levy penalty and interest on the differential amount.

Arjuna (Fictional Character): Krishna, What other precautions dealer should take during Vat Audit?

Krishna (Fictional Character):Arjuna, the dealer should pay attention towards the following:

1) The Taxpayer should reconcile the sales and purchases given for Vat Audit with the Audited Balance Sheet.

2) Set off should be availed only on purchases made in Maharashtra. CST declaration forms i.e. C, F, H, etc.  should be taken according to the Sales Invoice. It becomes difficult to collect Forms otherwise Tax has to be paid.

3) Taxpayer should keep ready the information related to Tax, Challans and returns of VAT. All this things are essential for VAT Audit, otherwise difficulty may arise.

Arjuna (Fictional Character): Krishna, What will happen if the dealer does not file the VAT Audit report on time?

Krishna (Fictional Character):Arjuna, VAT Audit report should be submitted on time i.e. before 15th January 18, if not then penalty amounting 1/10th of total Sales Turnover is required to be paid.

Arjuna (Fictional Character): Krishna, What taxpayer should learn?

Krishna (Fictional Character): Arjuna, It is very important to give correct information relating to sales and purchase. So many transactions were incurred to earn money by evading taxes. But in the information technology world, government departments give the information relating to taxpayers to each others. Because of this, tax evaders will be caught on one day. So, every taxpayer should file audit report and return with correct information.

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