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VAT Laws

-Summary

The Karnataka Value Added Tax Act, 2003 (KVAT Act) governs the levy and collection of Value Added Tax on the sale or purchase of goods in the State of Karnataka. The Act replaced the Karnataka Sales Tax Act to introduce a more structured and transparent VAT system.

Key Features
  • Introduced to levy tax on the value addition at each stage of sale.
  • Provides for input tax credit (ITC) to avoid cascading tax effects.
  • Applicable to registered dealers selling goods within Karnataka.
  • Includes provisions for registration, returns, audits, assessments, and penalties.
Important Definitions
  • Dealer: A person who buys, sells, supplies, or distributes goods directly or otherwise.
  • Goods: All kinds of movable property, excluding actionable claims, stocks, and securities.
  • Input Tax: Tax paid on purchases eligible for credit.
  • Output Tax: Tax collected on sales made by the dealer.
Registration of Dealers

Dealers are required to register under the Act if their taxable turnover exceeds the prescribed threshold.

  • Mandatory registration for dealers exceeding turnover limit.
  • Voluntary registration allowed for dealers below threshold.
  • Separate provisions for casual and non-resident dealers.
Levy of VAT

VAT is levied on the sale of goods within the State at different rates notified by the Government.

  • Multiple tax slabs (e.g., 1%, 5%, 14.5%) depending on the nature of goods.
  • Tax exempted for certain essential goods.
  • Tax collected is credited to the State Government.
Input Tax Credit (ITC)

Dealers can claim credit of VAT paid on purchases used for making taxable sales.

  • Available for purchase of goods for resale or manufacturing.
  • Not available for goods used for personal consumption or exempt sales.
  • Conditions and documentation required for claiming ITC.
Filing of Returns

Dealers must file periodic returns disclosing turnover, tax payable, and input tax credit claimed.

  • Monthly or quarterly returns depending on turnover.
  • Online filing facility provided by the Commercial Tax Department.
  • Late filing attracts penalties and interest.
Assessments and Audits

The Act empowers the authorities to conduct assessments and audits to verify compliance.

  • Self-assessment based on returns.
  • Reassessment in case of discrepancies or evasion.
  • Audit conducted for selected dealers based on risk parameters.
Penalties and Prosecutions
  • Penalties for late registration, non-filing of returns, and non-payment of tax.
  • Interest on delayed payments.
  • Prosecution for willful evasion or fraud.
Transitional Provisions

The KVAT Act included transitional provisions for dealers shifting from the Karnataka Sales Tax regime.

Repeal and Migration to GST

The KVAT Act ceased to apply from July 1, 2017, after the implementation of the Goods and Services Tax (GST) regime. However, certain legacy matters are still handled under the Act for the period prior to GST.

The Maharashtra Value Added Tax Act, 2002 came into force on 1st April 2005, replacing the earlier sales tax regime in the state of Maharashtra. It governs the levy and collection of value-added tax (VAT) on sales of goods within the state. Though VAT was subsumed by GST in 2017, the Act still applies to certain products like petroleum products and alcohol.

1. Objective of the MVAT Act

The primary objective of the MVAT Act was to introduce a transparent, efficient, and uniform tax system in Maharashtra, reducing the cascading effect of taxes and allowing input tax credit.

2. Key Definitions
  • Dealer: A person who sells or purchases goods in the course of business.
  • Goods: All kinds of movable property excluding newspapers, actionable claims, and money.
  • Sale: Transfer of property in goods for cash, deferred payment, or other valuable consideration.
  • Taxable Turnover: Turnover on which tax is payable after adjusting exemptions and deductions.
3. Applicability and Scope
  • Applies to sales of goods within Maharashtra.
  • Registration mandatory for dealers whose turnover exceeds specified limits.
  • Certain goods exempted or taxed at special rates.
4. Tax Rates

The MVAT Act provides for different rates based on categories of goods:

  • 1% – Precious metals, stones, etc.
  • 5% – Essential commodities and declared goods.
  • 12.5% – General category goods.
  • 20% or more – Specific luxury or demerit goods.
5. Input Tax Credit (ITC)

Dealers are allowed to claim credit of VAT paid on purchases against the VAT collected on sales, subject to conditions:

  • Goods must be used for taxable sales.
  • No ITC on goods used for exempted sales.
  • Carry forward or refund available under prescribed rules.
6. Filing of Returns

Dealers are required to:

  • File periodic VAT returns (monthly, quarterly, or yearly).
  • Pay tax due along with the return.
  • Maintain books of accounts and submit audit reports if turnover exceeds specified thresholds.
7. Assessments and Audits
  • Self-assessment is the norm; however, the Commissioner may initiate scrutiny or best judgment assessment.
  • Audit assessments are applicable to specified cases as per turnover or discrepancies found.
8. Appeals and Revisions

Provisions exist for appeal to:

  • Appellate Authority
  • Tribunal
  • High Court (on substantial questions of law)
9. Penalties and Prosecution
  • Penalty for late filing, under-reporting, or incorrect claims.
  • Prosecution for willful tax evasion or fraud.
10. Transition to GST

Though GST has replaced VAT for most goods and services from 1st July 2017, the MVAT Act continues to apply to:

  • Petroleum products (e.g., petrol, diesel, ATF).
  • Alcoholic liquor for human consumption.

The West Bengal VAT Act, 2003 came into force on 1st April 2005, replacing the earlier sales tax laws in the state. It introduced a value-added system of taxation on the sale of goods within West Bengal. Post implementation of GST in 2017, the VAT Act continues to be applicable only to certain specified goods like petroleum products and liquor.

1. Objective of the Act

The primary aim of the WB VAT Act was to eliminate cascading taxation, allow credit for input tax, ensure tax compliance, and enhance revenue collection through a structured and uniform system.

2. Important Definitions
  • Dealer: Any person engaged in the business of selling or purchasing goods.
  • Goods: All kinds of movable property, excluding actionable claims and money.
  • Sale: Transfer of property in goods for consideration.
  • Taxable Turnover: Portion of turnover on which VAT is payable after deductions.
3. Scope and Applicability
  • Applicable to all intra-state sales of goods in West Bengal.
  • Compulsory registration for dealers above specified turnover thresholds.
  • Exemptions and special rates for certain goods and dealers.
4. Tax Rates under WB VAT

The Act prescribed different rates of tax for different categories of goods:

  • 1% – Precious metals and jewellery.
  • 4% or 5% – Essential commodities and specified goods.
  • 12.5% – Standard rate for most other goods.
  • 20% or more – Luxury or demerit goods.
5. Input Tax Credit (ITC)
  • Permits registered dealers to claim credit for VAT paid on purchases.
  • Conditions apply such as goods being used for taxable sales within the state.
  • ITC not allowed for goods used for exempt sales or personal use.
6. Returns and Payment of Tax
  • Registered dealers must file returns monthly, quarterly, or annually based on turnover.
  • Tax must be paid along with the return by due dates specified under the Act.
  • Books of accounts, invoices, and records must be maintained accurately.
7. Assessments and Audits
  • Self-assessment was introduced for most dealers.
  • Audit assessments were conducted where discrepancies were suspected.
  • The Commissioner has the power to reassess or scrutinize records.
8. Appeals and Revisions

Aggrieved dealers may appeal against orders or assessments:

  • First Appeal – Before Appellate Authority
  • Second Appeal – Before Tribunal
  • Further – Before High Court on questions of law
9. Penalties and Offences
  • Includes fines for non-filing, late filing, incorrect reporting, or evasion.
  • Severe offences may attract prosecution under the Act.
10. Status Post-GST

With the implementation of GST from 1st July 2017, the VAT Act became inapplicable to most goods and services. However, VAT continues on:

  • Petroleum products like petrol, diesel, crude oil, etc.
  • Alcoholic liquor for human consumption

The Tamil Nadu Value Added Tax Act, 2006 governs the levy and collection of Value Added Tax (VAT) on the sale of goods within the State of Tamil Nadu. This Act replaced the Tamil Nadu General Sales Tax Act to implement a more transparent and efficient system of taxation based on value addition.

Key Features
  • Introduced to ensure uniform taxation and avoid cascading effects by providing Input Tax Credit (ITC).
  • Applicable to all registered dealers engaged in the sale of goods within the state.
  • Multiple tax rates based on the type of goods sold.
  • Mandatory maintenance of records and periodic filing of VAT returns.
Definitions
  • Dealer: Any person engaged in the business of buying or selling goods in Tamil Nadu.
  • Goods: Every kind of movable property excluding actionable claims, stocks, shares, and securities.
  • Input Tax: VAT paid by a registered dealer on purchases within Tamil Nadu.
  • Output Tax: VAT charged by the dealer on sales of taxable goods.
Registration of Dealers

Dealers are required to register under the Act upon crossing the prescribed turnover threshold.

  • Compulsory registration for dealers whose annual turnover exceeds Rs. 10 lakhs.
  • Voluntary registration permitted below the threshold.
  • Separate provisions for casual dealers and agents.
Levy of VAT

VAT is levied on every sale of goods within the State at rates notified by the State Government.

  • Standard rate: 12.5%
  • Lower rates: 1%, 4%, and 5% on specific goods.
  • Exempted goods listed in the First Schedule.
Input Tax Credit (ITC)

Input tax credit is available to registered dealers on purchases made within the State for resale or use in manufacture.

  • Credit not allowed for purchases used in exempt sales or for personal use.
  • ITC cannot be claimed on inter-state purchases or purchases from unregistered dealers.
  • Conditions apply for reversal of ITC in specific scenarios.
Returns and Assessments

Dealers are required to file monthly or quarterly VAT returns and pay tax accordingly.

  • Monthly returns for dealers above Rs. 10 lakh turnover.
  • Self-assessment based on returns filed.
  • Reassessment in case of incorrect or incomplete filing.
Audit and Enforcement
  • Department may conduct audit of accounts and records of dealers.
  • Inspection, search, and seizure provisions to check tax evasion.
  • Penalties and prosecution for non-compliance or fraud.
Transitional Provisions

Provisions for smooth transition from the Tamil Nadu General Sales Tax Act to the TNVAT Act were included for continuity in taxation and credit transfer.

Repeal and Migration to GST

The TNVAT Act, 2006 was repealed with effect from July 1, 2017, upon the introduction of the Goods and Services Tax (GST). However, legacy assessments, disputes, and returns up to June 30, 2017, are still governed by the TNVAT Act.

The Delhi Value Added Tax Act, 2004 came into effect from 1st April 2005, replacing the Delhi Sales Tax Act. It aimed to create a more efficient and transparent system of taxation on the sale of goods in the National Capital Territory (NCT) of Delhi. Post the implementation of GST in 2017, the VAT Act is limited in application to certain products.

1. Objective of the Act

The primary objective of the Delhi VAT Act was to streamline tax collection, reduce tax cascading, and allow for input tax credit to registered dealers, thus modernizing the indirect tax regime in the territory.

2. Key Definitions
  • Dealer: Any person engaged in the business of buying, selling, supplying, or distributing goods.
  • Goods: All types of movable property including actionable claims, excluding money and securities.
  • Turnover: Aggregate sale price or purchase price of goods during a prescribed period.
  • Taxable Turnover: Portion of turnover on which VAT is applicable after permitted deductions.
3. Applicability and Coverage
  • Applies to all intra-state sales within Delhi.
  • Registration mandatory for dealers exceeding prescribed turnover thresholds.
  • Some goods are exempt or taxed at concessional or special rates.
4. Tax Rates under the Delhi VAT Act

The Act categorizes goods into different schedules to apply suitable tax rates:

  • 1% – Precious metals and jewellery.
  • 5% – Essential commodities and notified items.
  • 12.5% – General rate for goods not listed in other schedules.
  • 20% – Special category goods including luxury and demerit items.
5. Input Tax Credit (ITC)
  • Registered dealers can claim credit for VAT paid on purchases.
  • ITC is allowed only if goods are used for taxable sales within Delhi.
  • No credit allowed on goods used for personal consumption or exempt sales.
6. Returns and Compliance
  • Dealers must file monthly/quarterly VAT returns depending on their turnover.
  • Returns must be accompanied by the payment of due taxes.
  • Proper maintenance of books of accounts and tax invoices is mandatory.
7. Assessments and Audit
  • Self-assessment is permitted, subject to verification by authorities.
  • Audit assessments may be initiated where discrepancies or under-reporting is suspected.
  • Department may inspect books and premises to verify accuracy.
8. Appeal and Revision
  • First appeal lies with the Appellate Authority within the prescribed time frame.
  • Second appeal can be filed before the VAT Appellate Tribunal.
  • Revisions or reviews may also be initiated by higher authorities on legal grounds.
9. Penalties and Offences
  • Penalties for late filing, non-payment, concealment, or misreporting of turnover.
  • Provisions for prosecution in cases of fraud or willful evasion.
10. Applicability after GST

With the introduction of GST from 1st July 2017, the Delhi VAT Act is now applicable only to:

  • Petroleum products (e.g., petrol, diesel, natural gas).
  • Alcoholic liquor for human consumption.

The Gujarat Value Added Tax Act, 2003 governs the levy, assessment, and collection of Value Added Tax (VAT) on the sale of goods within the State of Gujarat. It replaced the Gujarat Sales Tax Act to implement a modern taxation system that taxes value addition at each stage of the supply chain.

Key Features
  • Implements a destination-based tax on consumption of goods within Gujarat.
  • Allows Input Tax Credit (ITC) to avoid cascading effects.
  • Applies to all registered dealers and specific unregistered dealers under certain provisions.
  • Provides detailed procedures for registration, filing of returns, assessments, and audits.
Important Definitions
  • Dealer: A person engaged in the business of buying, selling, supplying, or distributing goods.
  • Goods: All kinds of movable property other than actionable claims, stocks, and shares.
  • Input Tax: VAT paid on purchases used in the course of business.
  • Output Tax: VAT collected on sales of taxable goods.
Registration of Dealers

Registration is compulsory for dealers whose turnover exceeds the prescribed threshold limit.

  • Threshold limit generally Rs. 5 lakhs or more for mandatory registration.
  • Voluntary registration permitted for dealers below the threshold.
  • Special provisions for casual and non-resident dealers.
Levy of VAT

VAT is levied on the sale or purchase of goods in Gujarat at rates notified by the State Government.

  • Standard rates: e.g., 12.5%, 4%, 1%, depending on the category of goods.
  • Zero-rated sales for exports.
  • Exemptions granted for certain essential goods listed in Schedule I.
Input Tax Credit (ITC)

Registered dealers are eligible for ITC on tax paid on purchases used in making taxable sales.

  • ITC allowed on capital goods and raw materials used in manufacturing or resale.
  • No ITC on purchases used for exempt sales or personal use.
  • Provisions for partial ITC reversal in case of both taxable and exempt sales.
Returns and Payments

Dealers must file VAT returns periodically and remit taxes due.

  • Monthly, quarterly, or annual returns based on turnover and category.
  • Returns include details of sales, purchases, ITC, and tax payable.
  • Late filing or non-payment attracts interest and penalties.
Assessment and Audit

The Act empowers the tax authorities to assess dealers based on returns or through scrutiny and audit.

  • Self-assessment based on dealer-submitted returns.
  • Audit assessments for selected dealers based on risk or discrepancy detection.
  • Reassessments in cases of underreporting or evasion.
Penalties and Offences
  • Penalties for failure to register, file returns, maintain books, or pay taxes.
  • Interest on delayed payments of tax.
  • Prosecution for willful evasion or fraudulent acts.
Transitional Provisions

The Act included provisions for transitioning from the previous Sales Tax Act and carrying forward credits, liabilities, and cases.

Repeal and GST Implementation

The Gujarat VAT Act, 2003 ceased to apply from July 1, 2017, upon the implementation of the Goods and Services Tax (GST). However, pending assessments, appeals, and other legacy issues relating to the VAT regime are still governed under the Act.

The Gujarat Value Added Tax Act, 2003 governs the levy, assessment, and collection of Value Added Tax (VAT) on the sale of goods within the State of Gujarat. It replaced the Gujarat Sales Tax Act to implement a modern taxation system that taxes value addition at each stage of the supply chain.

Key Features
  • Implements a destination-based tax on consumption of goods within Gujarat.
  • Allows Input Tax Credit (ITC) to avoid cascading effects.
  • Applies to all registered dealers and specific unregistered dealers under certain provisions.
  • Provides detailed procedures for registration, filing of returns, assessments, and audits.
Important Definitions
  • Dealer: A person engaged in the business of buying, selling, supplying, or distributing goods.
  • Goods: All kinds of movable property other than actionable claims, stocks, and shares.
  • Input Tax: VAT paid on purchases used in the course of business.
  • Output Tax: VAT collected on sales of taxable goods.
Registration of Dealers

Registration is compulsory for dealers whose turnover exceeds the prescribed threshold limit.

  • Threshold limit generally Rs. 5 lakhs or more for mandatory registration.
  • Voluntary registration permitted for dealers below the threshold.
  • Special provisions for casual and non-resident dealers.
Levy of VAT

VAT is levied on the sale or purchase of goods in Gujarat at rates notified by the State Government.

  • Standard rates: e.g., 12.5%, 4%, 1%, depending on the category of goods.
  • Zero-rated sales for exports.
  • Exemptions granted for certain essential goods listed in Schedule I.
Input Tax Credit (ITC)

Registered dealers are eligible for ITC on tax paid on purchases used in making taxable sales.

  • ITC allowed on capital goods and raw materials used in manufacturing or resale.
  • No ITC on purchases used for exempt sales or personal use.
  • Provisions for partial ITC reversal in case of both taxable and exempt sales.
Returns and Payments

Dealers must file VAT returns periodically and remit taxes due.

  • Monthly, quarterly, or annual returns based on turnover and category.
  • Returns include details of sales, purchases, ITC, and tax payable.
  • Late filing or non-payment attracts interest and penalties.
Assessment and Audit

The Act empowers the tax authorities to assess dealers based on returns or through scrutiny and audit.

  • Self-assessment based on dealer-submitted returns.
  • Audit assessments for selected dealers based on risk or discrepancy detection.
  • Reassessments in cases of underreporting or evasion.
Penalties and Offences
  • Penalties for failure to register, file returns, maintain books, or pay taxes.
  • Interest on delayed payments of tax.
  • Prosecution for willful evasion or fraudulent acts.
Transitional Provisions

The Act included provisions for transitioning from the previous Sales Tax Act and carrying forward credits, liabilities, and cases.

Repeal and GST Implementation

The Gujarat VAT Act, 2003 ceased to apply from July 1, 2017, upon the implementation of the Goods and Services Tax (GST). However, pending assessments, appeals, and other legacy issues relating to the VAT regime are still governed under the Act.

The Rajasthan Value Added Tax Act, 2003 came into effect from 1st April 2006, replacing the Rajasthan Sales Tax Act. It introduced a VAT regime to simplify the taxation structure and provide for input tax credit. After the implementation of GST in 2017, RVAT continues to apply only to select items such as petroleum products and liquor.

1. Objective of the Act

The RVAT Act aimed to establish a transparent and simplified tax system by introducing value-added taxation, minimizing tax evasion, and facilitating credit for tax paid on purchases (input tax credit).

2. Key Definitions
  • Dealer: A person engaged in the business of buying or selling goods in Rajasthan.
  • Goods: All types of movable property excluding money and actionable claims.
  • Sale: Any transfer of property in goods for cash, deferred payment, or valuable consideration.
  • Input Tax: VAT paid by a registered dealer on purchases within the state.
3. Applicability
  • Applicable to intra-state sales of goods in Rajasthan.
  • Mandatory registration for dealers exceeding specified turnover limits.
  • Certain categories of goods and transactions are exempt or zero-rated.
4. Tax Rates under RVAT

The Act provides for multiple tax rates depending on the type of goods:

  • 1% – Precious metals like gold and silver.
  • 4% or 5% – Essential commodities and industrial inputs.
  • 12.5% – Standard rate for general goods.
  • 20% or more – Luxury and demerit goods.
5. Input Tax Credit (ITC)
  • ITC allowed for VAT paid on purchases used in the course of business.
  • No credit for goods used for personal consumption or exempt sales.
  • Carry forward and refund of excess input credit subject to conditions.
6. Filing of Returns and Tax Payment
  • Dealers required to file monthly, quarterly, or annual returns based on turnover.
  • Tax payment must accompany the filing of returns.
  • Dealers must maintain proper accounts and issue tax invoices.
7. Assessments and Audit
  • Self-assessment scheme for compliant dealers.
  • Audit assessments conducted in case of discrepancies or non-compliance.
  • Authorities empowered to inspect books, premises, and issue reassessments.
8. Appeals and Revisions
  • First appeal before Appellate Authority within 60 days of order.
  • Second appeal before Tax Board or revisional authorities.
  • Further appeal to High Court on substantial questions of law.
9. Penalties and Offences
  • Penalties for delay in filing, underreporting, and non-payment of VAT.
  • Serious offences may result in prosecution and imprisonment.
10. Position after GST

Following the implementation of GST from 1st July 2017, the RVAT Act now applies only to:

  • Petroleum products such as petrol, diesel, ATF, and natural gas.
  • Alcoholic liquor for human consumption.

The Punjab Value Added Tax Act, 2005 came into force to replace the Punjab General Sales Tax Act. It introduced VAT as a more transparent and efficient system of taxation on the sale of goods within the State of Punjab, offering input tax credit and eliminating cascading effects.

Objectives of the Act
  • To levy VAT on intra-state sales of goods.
  • To enhance transparency and efficiency in tax collection.
  • To enable set-off of tax through Input Tax Credit (ITC).
  • To widen the tax base and improve compliance.
Key Definitions
  • Dealer: Any person engaged in the business of buying, selling, or distributing goods.
  • Goods: All kinds of movable property excluding actionable claims, stocks, and securities.
  • Taxable Goods: Goods liable to tax under the Act.
  • Input Tax: Tax paid by a registered dealer on purchases used in the course of business.
Registration of Dealers

The Act requires dealers meeting certain turnover thresholds to obtain registration.

  • Mandatory for dealers with turnover above the prescribed limit.
  • Voluntary registration available below the threshold.
  • Special registration rules for casual dealers and importers.
Levy and Collection of VAT

VAT is levied on sales of goods within the state at applicable rates as notified.

  • Different rates apply depending on the nature of goods (e.g., 1%, 4%, 12.5%).
  • Zero-rated sales for exports.
  • Exemptions for essential goods listed in Schedule A.
Input Tax Credit (ITC)

Registered dealers are entitled to claim ITC for VAT paid on inputs used for taxable sales.

  • ITC allowed for purchases made within Punjab and used for business purposes.
  • No ITC for purchases used in exempt sales or personal use.
  • Provisions for reversal of ITC in specific cases (e.g., damage, theft, or transfer to exempt sectors).
Returns and Tax Payments

Dealers are required to file periodic VAT returns and make tax payments.

  • Returns may be monthly, quarterly, or annually based on turnover.
  • Returns should include details of purchases, sales, ITC claimed, and tax payable.
  • Interest and penalties applicable for late or incorrect filing.
Assessment and Audit
  • Self-assessment system based on filed returns.
  • Audit assessments carried out selectively or where discrepancies arise.
  • Best judgment assessments for non-filers or fraudulent dealers.
Penalties and Offences
  • Penalties for non-registration, late filing, and incorrect returns.
  • Interest on delayed tax payments.
  • Provisions for prosecution in case of willful evasion or fraud.
Transitional Provisions and GST Implementation

The Punjab VAT Act, 2005 remained in force until the introduction of the Goods and Services Tax (GST) on July 1, 2017. While GST subsumed VAT for most goods, the Act continues to apply for legacy assessments and disputes related to the pre-GST era.

The Haryana Value Added Tax Act, 2003 came into force on 1st April 2003, replacing the earlier sales tax regime in the state. It aimed to ensure a more transparent, efficient, and credit-based taxation system on the sale and purchase of goods within Haryana. After the introduction of GST in July 2017, the HVAT Act now applies only to certain specified goods.

1. Objective of the Act

The primary goal of the HVAT Act was to introduce value-added taxation, promote tax compliance, eliminate cascading tax effects, and streamline revenue collection for the state.

2. Key Definitions
  • Dealer: Any person engaged in the business of buying or selling goods in Haryana.
  • Goods: All types of movable property including commodities, excluding actionable claims and money.
  • Taxable Turnover: The portion of turnover that is subject to VAT under the Act.
  • Input Tax: VAT paid on the purchase of goods intended for resale or business use.
3. Scope and Applicability
  • Applies to intra-state sale and purchase of goods in Haryana.
  • Dealers crossing the prescribed turnover threshold must register under the Act.
  • Specific goods are exempt or taxed at concessional rates as notified by the government.
4. Tax Rates under HVAT

The Act classified goods into various schedules with different rates of VAT:

  • 1% – Bullion and precious stones.
  • 4%/5% – Essential commodities and industrial raw materials.
  • 12.5% – General rate on most goods.
  • 20% or higher – Special rate for luxury and demerit goods.
5. Input Tax Credit (ITC)
  • ITC is available for VAT paid on purchases used for resale or manufacturing of taxable goods.
  • ITC is not allowed on goods used for personal consumption or exempt sales.
  • Excess ITC can be carried forward or refunded as per rules.
6. Filing of Returns and Compliance
  • Monthly/quarterly VAT returns must be filed based on turnover.
  • Returns must include details of purchases, sales, input tax, and output tax.
  • Dealers are required to maintain books of accounts, issue tax invoices, and submit payment with returns.
7. Assessment and Audit
  • Self-assessment for compliant dealers is the default method.
  • Audit or best judgment assessment may be initiated if discrepancies are found.
  • Department may inspect premises, verify accounts, and demand reassessment if needed.
8. Appeals and Dispute Resolution
  • Appeals may be filed with the Appellate Authority within 60 days of the order.
  • Further appeal lies with the Haryana Tax Tribunal and then the High Court.
9. Penalties and Offences
  • Penalties for failure to register, delay in return filing, and under-reporting of tax.
  • Offences such as tax evasion may attract prosecution and imprisonment.
10. Applicability after GST

Post the introduction of GST on 1st July 2017, HVAT is limited to the taxation of certain goods:

  • Petroleum products such as petrol, diesel, ATF, and natural gas.
  • Alcoholic liquor for human consumption.

The Telangana Value Added Tax Act, 2005 (originally enacted as the Andhra Pradesh VAT Act before the bifurcation of Andhra Pradesh) governs the taxation of intra-state sales of goods in the State of Telangana. The Act introduced a comprehensive VAT system replacing the earlier sales tax regime, ensuring transparency and allowing for input tax credits to reduce cascading taxes.

Objectives of the Act
  • To levy VAT on sales within Telangana.
  • To eliminate cascading effects through Input Tax Credit (ITC).
  • To simplify tax administration and improve compliance.
  • To ensure fair tax burden distribution.
Important Definitions
  • Dealer: Any person engaged in the business of buying, selling, or distributing goods.
  • Taxable Goods: Goods subject to VAT under the Act.
  • Input Tax: VAT paid on purchases used for taxable sales.
  • Turnover: The aggregate value of sales or purchases made by a dealer during a given period.
Registration of Dealers

The Act mandates compulsory registration for dealers exceeding the turnover threshold.

  • Threshold for mandatory registration typically starts at Rs. 5 lakhs.
  • Voluntary registration available below the threshold.
  • Special registration requirements for casual traders and importers.
Levy of VAT

VAT is levied at multiple rates depending on the type of goods.

  • Standard Rate: 14.5% for general goods.
  • Reduced Rates: 1%, 5% for essential or specific goods.
  • Zero-Rated Sales: For exports outside the state/country.
  • Exempted Goods: Listed in Schedule I (e.g., unprocessed food grains, fresh vegetables).
Input Tax Credit (ITC)

Registered dealers can claim ITC on VAT paid for purchases made within Telangana.

  • ITC allowed only for goods used in taxable sales or manufacturing.
  • ITC not available for exempt sales or goods used for personal use.
  • Provision for reversal of ITC under specific circumstances (e.g., damaged goods, stock transfers).
Returns and Payment of Tax

Registered dealers are required to file VAT returns periodically and pay due taxes.

  • Filing frequency: Monthly or quarterly based on dealer category.
  • Details to be disclosed: Sales, purchases, ITC claimed, and VAT payable.
  • Late filing attracts interest and penalties.
Assessment and Audit
  • Self-assessment based on returns is the default mechanism.
  • Audit assessments for specific dealers selected based on risk or discrepancies.
  • Reassessment possible in cases of evasion or incorrect declarations.
Penalties and Offences
  • Monetary penalties for delays, incorrect filing, and non-payment.
  • Interest for delayed tax payments.
  • Prosecution for willful tax evasion and fraudulent activities.
Transitional Provisions and GST Implementation

The Telangana VAT Act remained in force until the introduction of the Goods and Services Tax (GST) from July 1, 2017. However, it continues to apply to transactions and assessments related to the pre-GST period.

The Andhra Pradesh Value Added Tax Act, 2005 came into force on 1st April 2005, replacing the Andhra Pradesh General Sales Tax Act. It aimed to create a more efficient and transparent tax system by introducing value-added tax. With the implementation of GST in July 2017, the APVAT Act now applies only to certain specified goods like petroleum products and alcohol.

1. Objective of the Act

The main objective of the APVAT Act was to ensure a seamless tax system on the sale of goods by eliminating the cascading effect of taxes and offering input tax credit to businesses.

2. Key Definitions
  • Dealer: Any person engaged in the business of buying or selling goods in Andhra Pradesh.
  • Goods: Includes all kinds of movable property, excluding actionable claims and money.
  • Input Tax: VAT paid by a registered dealer on purchases made within the state for use in business.
  • Taxable Sale: Sale of goods which are not exempt and on which VAT is applicable under the Act.
3. Scope and Applicability
  • Applicable to intra-state sales within Andhra Pradesh.
  • Registration is mandatory for dealers exceeding a specific turnover limit.
  • Certain goods and transactions are exempt or attract concessional rates.
4. VAT Rates under APVAT

The Act prescribed various tax rates based on the nature of goods:

  • 1% – Precious metals like gold, silver, and diamonds.
  • 4% – Essential goods and industrial inputs listed in Schedule IV.
  • 12.5% – Standard rate applicable to most other goods.
  • 14.5% – Applied to demerit or luxury goods.
5. Input Tax Credit (ITC)
  • Available on tax paid for purchases intended for taxable sales or manufacturing.
  • Not available for goods used for personal use, exempt sales, or non-business purposes.
  • Provision for carry-forward or refund of excess credit under specific conditions.
6. Returns and Compliance
  • Dealers must file monthly returns with details of purchases, sales, and tax payable.
  • Tax must be paid before or along with return filing.
  • Proper maintenance of records, tax invoices, and accounts is required.
7. Assessment and Audit
  • Self-assessment for registered and compliant dealers.
  • Audit assessments for irregularities or suspected tax evasion.
  • Authorities can inspect records, seize documents, and issue reassessments.
8. Appeals and Revisions
  • First appeal lies with the Appellate Deputy Commissioner (CT).
  • Further appeals can be made to the Appellate Tribunal and then to the High Court on legal grounds.
9. Penalties and Offences
  • Penalties for late filing, non-payment, and incorrect returns.
  • Offences such as tax evasion or fraudulent ITC claims may lead to prosecution.
10. Position after GST

After the GST rollout on 1st July 2017, the APVAT Act applies only to:

  • Petroleum products like petrol, diesel, ATF, and natural gas.
  • Alcoholic liquor for human consumption.

The Bihar Value Added Tax Act, 2005 was enacted to replace the Bihar Sales Tax Act, aiming to modernize and simplify the taxation system on the sale and purchase of goods within the State. It introduced a VAT regime with the provision for Input Tax Credit (ITC), reducing the cascading effect of taxes and enhancing transparency in tax administration.

Objectives of the Act
  • To levy VAT on the intra-state sale of goods in Bihar.
  • To ensure a transparent and efficient tax system.
  • To allow credit for input taxes paid, reducing tax-on-tax burden.
  • To improve compliance and widen the tax base.
Key Definitions
  • Dealer: Any person engaged in the business of buying or selling goods in Bihar.
  • Goods: Every kind of movable property including actionable claims, growing crops, and grass.
  • Input Tax: Tax paid on purchases that are eligible for credit.
  • Output Tax: VAT collected on sales.
Registration of Dealers

Dealers are required to register under the Act based on turnover limits and the nature of business.

  • Mandatory registration for dealers with turnover above the prescribed threshold (e.g., Rs. 5 lakhs).
  • Voluntary registration option for small dealers.
  • Separate provisions for registration of casual and non-resident dealers.
Levy and Collection of VAT

VAT is levied on the sale of goods at rates determined by the nature of goods.

  • Standard VAT rates: 1%, 5%, 13.5%, and others as notified.
  • Exempt goods listed under Schedule I (e.g., unprocessed food grains, milk).
  • Zero-rated goods typically include exports and inter-state stock transfers under specific conditions.
Input Tax Credit (ITC)

The Act provides for credit of input tax paid on purchases made within Bihar for the purpose of resale or manufacturing.

  • ITC can be claimed by registered dealers on eligible purchases.
  • No ITC for purchases used in exempt sales or for personal consumption.
  • Conditions for reversal of ITC include goods lost, destroyed, or used for exempted supplies.
Returns and Payment of Tax

Dealers must periodically file VAT returns and remit the tax collected.

  • Monthly or quarterly returns depending on turnover and registration category.
  • Returns must include details of sales, purchases, ITC, and output tax liability.
  • Interest and penalties applicable for delayed filing or payment.
Assessment and Audit
  • Self-assessment based on the returns submitted by the dealer.
  • Audit and scrutiny assessments conducted by tax authorities if discrepancies arise.
  • Best judgment assessments in cases of non-compliance or suspected fraud.
Penalties and Offences
  • Penalties imposed for delayed registration, non-filing of returns, and tax evasion.
  • Interest payable on delayed tax payments.
  • Provisions for prosecution in cases of willful default or fraud.
Transitional Provisions and GST Migration

The Bihar VAT Act, 2005 remained in effect until the introduction of the Goods and Services Tax (GST) on July 1, 2017. The VAT provisions still apply to past transactions and are relevant for audits, assessments, and appeals pertaining to the pre-GST period.