What is VAT?
Value Added Tax (VAT) is a modern and progressive form of sales tax. It is charged and collected by dealers on the price paid by the customer. VAT paid by dealers on their purchases is usually available for set-off against the VAT collected on sales.

What types of businesses are liable for VAT?
VAT applies to all types of businesses including (1)Importers (2)Manufacturers (3)Distributors (4)Wholesalers (5)Retailers (6)Works Contractors (7)Lessors

How is VAT charged?
All registered dealers, regardless of where they are in the chain of manufacture and production, must charge VAT on their sales of taxable goods and collect it from their customers. Registered dealers must issue a tax invoice to other registered dealers showing the VAT amount being charged as a separate amount. Registered dealers who pay VAT on their purchases can normally claim a “set-off” for the VAT paid to their suppliers. As a result, VAT is not a cost to the dealers. Dealers must ensure that tax is charged separately in their purchase invoice in order to be eligible to claim set-off. Certain dealers who sell mainly to consumers at retail level can opt for a simplified system of VAT calculation and payment under a Composition Scheme. Under the Composition Scheme, dealers will not issue a tax invoice or show VAT as a separate amount on a bill or cash memorandum.

What are the obligations of dealers registered for VAT?
Dealers who are required to be registered for VAT must
(1)Charge and collect VAT on their sales of taxable goods
(2)Issue proper tax invoices
(3)Keep proper records and books of account
(4)Calculate the VAT due to Government based on VAT charged on sales LESS any VAT available as a set-off on business purchases
(5)File VAT returns on a regular basis declaring their VAT liability
(6)Pay any amount of VAT due to the Government with the VAT return

What is the rate of VAT?
Under the VAT, the tax rates have been simplified. There are only two main rates of VAT: (1)4% for items consisting mainly of raw materials used in the manufacturing process, IT products and some goods of common consumption (2)12.5% for all goods unless they are listed under the other rates Foodgrains including pulses, milk, vegetables and books are not subject to VAT. In addition, there are two other rates for specific items: (1)1% for gold, silver, other precious metals, precious and semi precious stones and their jewellery (2)20% for liquor The only exception to these rates is for the sale of motor spirits, which have special tax rates based on the existing Bombay Sales of Motor Spirit Taxation Act, 1958, subject to a floor rate of 20%.

Who should register for VAT?
If you are a dealer and your turnover exceeds the threshold, then you must register with the Sales Tax Department. However, there are provisions for dealers to register voluntarily. If you are registered under the Central Sales Tax Act, you must register for VAT, regardless of the threshold.

What is the threshold?
The threshold is based on the total turnover of sales and the level of taxable sales or purchases in a year commencing 1 April. The threshold limit above which you must register, depends on the nature of your business. If your are an importer and your total turnover exceeds Rs. 1,00,000 and your taxable sales or purchases exceed Rs.10,000 in a year commencing 1st April, you must register and account for tax. If you are not an importer and your total turnover exceeds Rs 5,00,000 and your taxable sales or purchases exceed Rs.10,000 in a year commencing 1st April, you must register and account for tax. “Importer” for this purpose means a dealer who brings any goods into the state or to whom any goods are despatched from any place outside the state.

How do I register for VAT?
You must apply for a Registration Certificate, using form number 101. The application form has instructions to help you to complete it correctly. The instructions tell you what information and documents you will need to submit with your application. You can obtain form 101 from your local Sales Tax Office. You can get the address of your nearest office from the telephone directory.

For more details visit the site : www.salestax.maharashtra.gov.in or contact us.