MVAT – Amendments to Schedule entries and Notifications under the Maharashtra Value Added Tax Act, 2002

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TRADE CIRCULAR No.VAT/AMD-1013/1C/ADM-8

Trade Cir. No. 3 T of 2013 – Mumbai, Dt. 10.06.2013

Sub : Amendments to Schedule entries and Notifications under the Maharashtra Value Added Tax Act, 2002.

Ref. :

1. Notification published in the Government Gazette, Extra ordinary Part-IV-B No. 36 dated 30th March 2013.

2. Notification published in the Government Gazette, Extra ordinary Part-IV-B No. 45 dated 30th March 2013.

3. Corrigendum to Notification issued on 30^th March 2013 published in the Government Gazette, Extra ordinary PartIV-B No. 64 dated 26^th April 2013.

Gentlemen/ Sir/ Madam,

The Honble Deputy Chief Minister and Finance Minister in Budget Speech delivered on 20^th March 2013 made announcements to exempt, reduce or enhance the tax in respect of certain goods. To give effect to the Budget proposals, the Schedules A, B, C and D appended to Maharashtra Value Added Tax Act, 2002 are amended with effect from 1^stApril 2013. Further, certain notifications are also amended. These amendments are briefly discussed below:

1. Amendments to SCHEDULE-A:‑

(1) Entry-4:‑

(a) Rice Bran was excluded from Entry 4 of SCHEDULE A and was covered under entry 49 of Schedule C which was taxable at 5 per cent.

(b) The sub-clause (ii) of clause (c) of-entry 4 of SCHEDULE A (which pertains to Rice Bran) is now deleted. Hence, the ‘Rice Bran’ will now be covered under ‘Husk and Bran of Cereals and Pulses’ and will be Tax Free with effect from 1^stApril 2013.

(2) Entry-9A:‑

(a) This entry covers i.e. Paddy, rice, wheat and pulses; flours of aforesaid goods. It also includes atta, maida, rava and suji and mixed flours of cereals and pulses etc.

(b) The exemption to these goods was available till 31^st March 2013. This period is extended upto 31^st March 2014. The rate of tax on these goods till 31^st March 2014 will continue to be NIL.

(3) Insertion of new entry 27A:‑

(a) A new entry is added so as to exempt ‘Hand Pumps’ used for pumping water.

(b)Earlier, ‘Hand Pumps’ were covered under entry 42 of Schedule C, and were taxable at 5 per cent.

(c) In view of insertion of new entry in Schedule-A and deletion of Schedule entry C-42, with effect from 1^stApril 2013, ‘Hand Pumps’ used for pumping water will be taxable at NIL rate.

(d) However, due to deletion of entry 42 of Schedule C, the parts and fittings will now attract tax at respective rates (i.e. 5% or 12.5%) depending upon the fact whether these parts and fittings fall under SCHEDULE-C or, as the case may be, SCHEDULE-E-1.

(4) Entry-36:‑

(a) Entry 36 covers Judicial Stamp papers, Court fee stamp, postal items like envelopes, post cards etc. These items attract NIL tax, when these items are sold by the Government.

(b) This entry is now re-casted to include along with items listed at (a) above,

(i)Judicial, Non judicial Stamp papers, Court fee Stamps sold by Government Treasuries as well as by Vendors authorized by Government.

(ii) Postal Stamp, Postal Envelope, Postal Stationery and philatelic material such as, Pigeonogram, Rocketgram and First Day Cover.

(5) Entry 45A:‑

(a) Entry 45A of SCHEDULE A is deleted.

(b) As a result of this amendment, `unmanufactured tobacco’ (other thanunrnanufactured tobacco when sold in packaging under the Brand name)which was tax free under this entry, will now get covered under ScheduleE-1. The rate of tax shall be 12.5%

(6) Entry 51:

(a) This entry covers various items such as Papad, Gur, Chilies, turmeric, and tamarind whole or powdered, Solapuri Chaddars, Towels and Wet dates etc

(b) The exemption available to the goods covered under this entry is extended for one year. Therefore, these goods will continue to attract NIL tax upto 31^st March 2014.

(7) Entry 59:‑

(a) This entry deals with raisins and currants. The rate of tax till 31^st May 2013 is NIL.

(b) This exemption is extended till 31^st March 2014.

(8) Addition of new entry 62.

(a) A new entry is inserted to cover Water Meters sold to Local bodies.

(b) The rate of tax on Water meters sold to Local bodies will attract NIL tax. However, if the Water meters are sold to other than Local bodies then, it will be taxable at the rate of 12.5%.

2. Amendments to SCHEDULE-B:‑

(1) Entry 1:

(a) Prior to this year’s amendment, entry B-1 covered articles made of precious metals of fineness not less than fifty percent whether containing precious stones, semi precious stones, diamonds or pearls whether real or cultured and excludes the goods covered under entry 105 of SCHEDULE C.

(b) This entry is amended so as to,- –

(i) exclude Industrial goods and industrial tools as covered under entry 53A of SCHEDULE C and

(ii) enhance the rate of tax from 1% to 1.1% for the period 1^stApril 2013 to 31^st March 2014.

(c ) The industrial goods and industrial tools excluded from this entry will be covered under the new schedule entry 53A will attract tax at the rate of 5 percent.

(2) Entry 2 :‑

(a) This entry covers precious metals and alloys of any of them. This entry is also amended and the rate of tax is increased from 1% to 1.1% for the period 1^stApril 2013 to 31^st March 2014.

(b) A corrigendum cited at Ref.-3 above is issued in order to correct the technical error as stated therein.

(3) Entry-3:

(a) Entry 3 covers precious stones including diamond, semi-precious stones and pearls whether real or cultured.

(b) As stated in budget speech it was proposed that for the period 1^stApril 2013 to 31^st March 2014, the tax on ‘diamonds’ to be increased from 1.0% to 1.1%.

(4) Insertion of new entry 3A:

(a) As explained above, ‘diamonds’ are excluded from entry 3 and new entry is inserted as entry 3A for diamonds.

(b) Thus, diamonds sold during period 1^stApril 2013 to 31^st March 2014 will be taxable at the rate 1.1%.

(c ) However, from 1^stApril 2014 onwards the rate on diamond will be 1%.

3. Amendments to SCHEDULE-C:-

(1) Entry 3 :‑

(a) This entry covers all kind of bricks. The amendment is made to exclude `paver blocks’ from this entry.

(b)As a result of this amendment, ‘paver blocks’ will be taxable at the rate of 12.5%.

(2) Entry 12:‑

(a) This entry covers Bidi leaves and bidi. At present bidi is taxable at 5%.

(b) Sub-entry (b) pertaining to bidi is deleted.

(d)In view of this, from 1^stApril 2013 bidi will be taxable at the rate of 12.5% being covered by schedule entry E- 1.

(3) Entry 29:‑

(a) Entry 29 deals with drugs and medicines.

(b) The amendment is made so as to exclude products capable of being used as cosmetics, shampoos.

(c) Accordingly, these goods are excluded from this entry. As a result of this products capable of being used as ‘Cosmetics and Shampoos’ are taxable at the rate of 12.5%.

(4) Addition of new entry 31A:‑

(a) A new entry 31A is inserted so as to include Excavators covered under item No. 8429 52 00 of the Central Excise Tariff Act, 1985 (5 of 1986) and which are not liable for registration under Motor Vehicles Act, 1988.

(b) The rate of tax on aforesaid Excavators shall be 5%.

(5) Deletion of entry 42:‑

(a) The entry 42 deals with the hand pump, parts and fittings. As explained in Para 1(3) above, hand pumps are now made tax free. In view of this, entry 42 is deleted.

(b) However, parts and fittings covered under C-42 are not added to the entry 27A of SCHEDULE A. As a result of this, the parts and fittings will now be taxable at respective rates depending upon the fact whether these parts and fittings fall under SCHEDULE-C or, as the case may be SCHEDULE-E-1.

(6) Deletion of entry 49:‑

(a) The entry 49 earlier covered Rice Bran which was taxable at the rate of _5%.

(b) As explained entry A-4 is accordingly amended as explained in Para 1.(1). As a result, this entry is deleted as rice bran is included under Schedule entry A-4 and is made taxfree.

(7) Insertion of new entry 53A:-

(a) A new entry 53A is inserted so as to carve out ‘Industrial goods and Industrial tools’ made up of different precious metals or alloys any of them.

(b) These goods will be taxable at the rate of 5%.

(8) Entry 107:-

(a) Clause (g) of sub-entry (11) of entry 107 deals with the powders, tablets, cubes, crystals and other solids or liquids from which non-alcoholic beverages and soups are prepared.

(b) Clause (g) is deleted. As a result, these goods including coffee powder will become taxable at the rate of 12.5%.

(9) Entry C-108:‑

^(a)The entry-108 Tea in leaf or powder form including instant Tea. ^b

(b) The existing rate of tax is 5% till 31^st March 2013. This concessional rate is extended till 31^st March 2014.

4. Amendments to SCHEDULE-D:‑

(1) Entry 12:- The entry 12 is amended. The amendments are explained briefly.

(a) Entry 12 covers tobacco, manufactured tobacco and products thereof including cigar and cigarettes. But excludes,-

(i) Unmanufactured tobacco when sold in packets under brand name

(ii) Bidi and goods covered under entry 45A of Schedule A.

(b) In this year’s budget speech, Hon’ble Deputy Chief Minister has announced that tax on unmanufactured tobacco that remained under Entry 45A of SCHEDULE A be increased from NIL to 12.5 per cent.

(c)To give effect to the Budget proposal, goods described in Para (a) above are excluded from entry D-12, entry D-12 is re-drafted. Now, entry D’ 12 will include tobacco, manufactured tobacco and products thereof but will exclude Bidi, unmanufactured tobacco whether sold under brand name or not and Cigar and cigarettes.

(d) The goods covered under entry D-12 will be taxable at the rate of 20 per cent.

(1) Entry-14:

(a) A new entry under Schedule D is carved out viz. D-14.

(b) This includes Cigar and cigarettes and will be taxable at the rate of 25%.

5. Amendments to Other Notifications. In view of the Budget Speech

the following notifications are also amended:-

(1) Amendment to notification issued under Entry 2 of SCHEDULE A:

(a) Earlier, in year 2008, under this entry State Government has issued notification bearing No. VAT-1508/ CR-96 /Taxation-1, dated 5^thNovember 2008.

(b) This notification is amended and Braille Watches are added at Sr. No. 3. In view of this, with effect from 1^stApril 2013, the rate of tax on Braille Watches will be NIL.

(2) Amendment to notification issued under Entry 107 of SCHEDULE C:‑

(a) The Entry 107(8) of SCHEDULE C pertains to Medical devices and implants. Under this entry State Government is empowered to issue notification and notify the Medical devices and implants for the purposes of this sub-entry.

(b) Notification bearing No. VAT-1505/ CR-233 /Taxation.-1 dated 23^rd November 2005 issued under sub-entry (8) of Entry 107 for medical devices is being amended so as to add ‘Automated Implantable Cardiac Defibrillators (AICD)’ covered under excise heading 9021 and with effect from 1^stApril 2013 the rate of tax will be 5%”. This product will be item no. (40) of the notification.

(3) Amendment to notification issued under section 41(2) of MVAT Act, 2002.

(a) The notification issued under section 42 for composition with regards to second hand motor vehicle is being amended to include Tractors.

(b) As a result, subject to conditions stated in the aforesaid notification the dealer dealing in the second hand tractors will also become eligible to avail the benefits under this notification.

(4) notification issued under entry 101 of SCHEDULE C:

(a) The notification issued under entry 101 (a) and (b) is amended with effect from 1^stApril 2013 to include Industrial Fabrics and varieties of textile and textile articles as covered under Chapter head 5901, 5902 and 5903.

(b) As a result, Industrial fabrics and varieties of textile and textile articles as covered under Chapter head 5901, 5902 and 5903 will be taxable at 5 per cent.

(5) Issuance of notification-under section of 8(5) of the Central Sales Tax Act, 1956.

(a) In year 2012, the Furnishing Fabrics notified under entry 101 of SCHEDULE C was made taxable at last point of sale. To explain this, a Trade Circular No. 16T of 2012 was issued on 25^th September 2012.

(b) In this year’s Budget Speech, it was announced that inter-state sales of Furnishing Fabric will be made Tax free.

(c) Accordingly, the State Government, in exercise of the powers conferred under section 8(5) of the Central Sales Tax Act, 1956 has issued a notification cited at Ref. 4 above.

(d) By this notification tax payable on sale of Furnishing cloth (notified under entry 101 of SCHEDULE C) in the course of inter-State trade or commerce made to any person or dealer by any dealer having his place of business in the State of Maharashtra in respect of the sale of said goods is exempted.

6. This circular cannot be made use of for legal interpretation of provisions of law as it is clarificatory in nature. If any member of the trade has any doubt, he may refer the matter to this office for further clarification.

7. You are requested to bring the contents of this circular to the notice of the members of your association.

Yours faithfully,

No.VAT/AMD-2013/1C/ADM-8

Trade Cir. No.3 T of 2013