CA Umesh Sharma
INTRODUCTION OF SERIES “KARNITI”
In The Mahabharata on the Battlefield of Kurukshetra, the conversation between Lord Shri Krishna and Arjuna gave birth to the Holy book “Bhagwat Gita”
Wherein Arjuna asked many questions to Lord Krishna and Lord Krishna answered the questions with full justification.
Today a common man is facing many difficulties and he always strives to overcome these difficulties and problem. These problems may be financial or social and we always try to find answers for these problems.
Lord Krishna very easily and joyfully answered to the questions of Arjuna due to which Arjuna was happy and motivated to take further actions.
Keeping this conversation between Lord Krishna and Arjunaas the foundation we will learn certain basic financial and tax matter. Let us try to get answers to our questions in a bit different and joyful manner. The character of Arjuna will be played by the common man or tax payer and the character of Lord Shri Krishna the Expert for giving solutions to all problems.
This is a small attempt to get answers to our queries related to tax matters in simple manner.
There is no intention of hurting anyone’s religious feeling and this is a small attempt of knowledge sharing in a simple way.
KARNITI PART: 1
State Budget: Relief in MVAT up to Rs. 10 Lakh but No relief for refund & LBT
Arjuna (Fictional Character): Krishna, on 5th June 2014, Deputy Chief Minister and Finance Minister of Maharashtra State presented the finance budget for the year 2014-15. Taxpayers had many expectations from the budget due to all round changes and upcoming elections.
Krishna (Fictional Character): Yes Arjuna, due to Loksabha elections Finance Minister has presented interim budget on 24th February. Therefore from State budget of 2014-15 post elections, taxpayers had many expectations. Through this budget many new things and changes came in but, finance minister kept mum on certain things like LBT and Toll Charges on usage of road.
Arjuna: Krishna, What are the changes in this budget?
Krishna: Arjuna, The VAT department has not yet issued notification regarding the changes but some important changes given in budget are as under:
1. VAT REFUND,NO RELIEF: Finance Minister while giving speech on taxes, first of all said that if selling dealer has not paid VAT then it is recovered from purchasing dealer along with interest and penalty by disallowing the set off, however when VAT is recovered from the selling dealer then it should be refunded to the purchasing dealer by allowing set off. It is mentioned that this refund should be given expeditiously. However dealer doesn’t receive such refund.
Further in our opinion department should give authentic information to the dealer regarding VAT recovered from the defaulting dealer, so that dealer can claim the refund. In the case of Mahalaxmi cotton, VAT department has filed affidavit with Mumbai high court that it will grant refund to such dealers. However department has not yet executed on this. It seems that FM knows the issue, but can’t solve it. How pathetic situation is this.
2. To grant relief to small taxpayers from the rules and compliances of VAT, limit of compulsory registration has been increased from Rs. 5 Lakh to Rs. 10 Lakh. Further if the turnover of the taxpayers is less that Rs. 10 Lakh in the year 2013-14 and they are registered under VAT then they can make application for cancellation of registration before 30th September 2014 and cancel their registration.
3. Late fee of Rs. 5,000/- was levied for delay in filing VAT return. Now if return is filed within one month from the due date then late fees of Rs. 2,000/- will be levied. Further if taxpayer files pending returns up to 1st April 2014 by paying tax and interest then they can be filed with late fee of Rs. 1,000/- only. Late fees already paid will not be refunded.
4. Composition scheme is available to taxpayers whose annual turnover is less than Rs. 50 Lakhs. In this budget this scheme is made more attractive. If retailers are registered under this scheme then VAT will be levied @ 1% of turnover or 1.5% of the taxable turnover.
5. From the year 2013-14 turnover limit for carrying out VAT audit has been increased from Rs. 60 Lakh to Rs. 1 Crore. It means now limit for tax audit and VAT audit will be same.
6. The limit of levying luxury tax has been increased from Rs. 750 to Rs. 1,000/-. Further 4% Luxury tax will be levied up to Rs. 1,500 and Rs. 10% will be levied for more than Rs. 1,500/-.
7. The basic limit for levying profession tax to employees has been increased from Rs. 5,000/- to Rs. 7,500/-.
8. VAT on cotton was levied @ 5%, now it is reduced to 2%.
9. If the dealer has sold specified goods, VAT on which is charged @ 12.5% to government then they can be sold @ 5% only.
10. In the assessment or audit from the department and addition tax is required to be paid by the dealer then additional interest @ 25% was levied other than normal interest. Now if certain conditions are specified this additional interest will not be levied.
Arjuna: Krishna, What taxpayer should learn from this Budget?
Krishna:Arjuna, every year finance minister of the state declares budget and accordingly changes in the laws were made. Some of the changes are beneficial for the taxpayer and some are to the government. Taxpayer should accept these changes and should follow tax laws and government also should not levy harsh provision on the taxpayer. If there are harsh provision then taxpayers finds other ways for escaping. Government should levy tax keeping this mind. It is said that “King says and others follow.” In this connection we can say that, Finance Minister informed to give refunds expeditiously but VAT department should follow this. At the end government collects taxes through various means but its benefits are for all.