VAT is a simplified and transparent system of tax in which tax is levied on the value additions, at each stage in the production – distribution with provision of set - off of tax paid on earlier stage.
It will replace RST Surcharge and Turnover Tax.
Sales tax is single point levy as against multiple point levy under VAT with set off provisions being available for tax paid at earlier stage. Thus, in sales tax no tax is being levied on the value additions on subsequent sales
Under VAT tax is paid at each stage of Sale, the value addition is taxed and set-off of the tax paid in the State at the earlier stage (input tax) is granted against subsequent sales (output tax). Thus VAT eliminates tax cascading
The net tax payable by a VAT dealer under the VAT Act would be equivalent to the total of the output tax, purchase tax and reverse tax after reducing there from, the amount of input tax credit available.
"Input tax" means tax paid or payable by a registered dealer in the course of business, on the purchase of any goods made from a registered dealer.
"Output tax" means the tax charged or chargeable under this Act by a registered dealer in respect of the sale of goods in the course of his business
"Reverse tax" means that part of the input tax for which credit has been availed in contravention of the provisions of section 18.
Input tax credit shall be allowed, to registered dealers, other than the dealers covered by sub- section (2) of section 3 or section 5, in respect of purchase of any taxable goods made within the State from a registered dealer to the extent and in such manner as may be prescribed, for the purpose of –
- sale within the State of Rajasthan; or
- sale in the course of Inter - state trade and commerce; or
- sale in the course of export outside the territory of India;or
- being used as packing material of goods, other than exempted goods, for sale; or
- being used as raw material in the manufacture of goods other than exempted goods, for sale within the State or in the course of Inter-state trade or commerce; or
- being used as raw material in the manufacture of goods for sale in the course of export outside the territory of India; or
- being used in the State as capital goods; however, if the goods purchased are used partly for the purposes specified in this sub-section and partly as otherwise, input tax credit shall be allowed proportionate to the extent they are used for the purposes specified in this sub-section.
VAT provides set-off for the tax paid earlier through input tax credit/rebate. This input tax credit can be set off by a registered dealer against the amount of his output tax. VAT is based on the value addition to the goods.
Registration of dealer with gross annual turnover above Rs. 10 lakh will be compulsory. All the existing dealer registered under Rajasthan sales tax will automatically registered under VAT act. A new dealer will be allowed 30days time limit from the date of liability to get registered.
Small Dealer with annual gross turnover not exceeding Rs. 50Lakh who are otherwise liable to pay VAT, shall however have the option for a composition scheme with payment of tax at small percentage of gross turnover. The dealer option composition scheme will not be entitle to input credit.
Under Vat simplified form of return are notified. Returns are to be filed monthly/quarterly as specified in the state acts/rules, and will be accompanied with the payment challans. Every return furnished by the dealer will be scruitnised expeditiously within prescribed time limit from the date of filling the return. If any technical mistake is detected on scrutiny, the dealer will be required to pay the deficit appropriately.
The taxpayer's Identification Number will consist of 11digit numerals through out the country. First two characters will represent the state code as used by the union ministry of home affairs. The set up of the next nine characters may, however, be different in different states.
If a registered dealer is making a local sale to another registered dealer of Rajasthan, a tax invoice can be issued. Tax invoice should always mention:
- The word 'Tax Invoice' in a prominent place
- Identity of the seller (with registration number, name & address) [Pre printed]
- Identity of the buyer (with registration number, name & address)
- Description, quantity, volume and value of goods sold and services provided
- Amount charged with the amount of tax charged in the transaction indicated separately
In retail sales, which are much more numerous and of smaller amounts, retail sale invoice can be issued. Although retail invoice should always identify the seller and indication of buyer's name is optional. Sale price shall be inclusive of tax charged thereon. Moreover the word 'retail invoice' or 'bills' should be mentioned in a prominent place. No tax credit can be availed by the purchaser on the strength of retail invoice.
In the case of interstate sale/purchase the old provision of central sales tax act is applicable. The central statutory forms, i.e. Form C,D,F,H etc., shall continue to remain applicable.