Entries Tagged 'VAT' ↓

Toll Free Number for search for Dealer Registered under Central Sales Tax


Toll Free Number for TIN Verification of Dealers Registered under Central Sales Tax Act :   


                                         1800 2200 17  


Steps to be followed for TIN Verification : 

1) Please dial the toll free number 1800 2200 17 from a BSNL / MTNL landline phone from anywhere in India.
2) Welcome message will be played by the Interactice Voice Response (IVR) System.
3) The system will prompt you to choose ‘1’ for English ‘2’ for Hindi”.
4) Select the required language.
5) The system will prompt you to enter the 11 digit TIN of the dealer you wish to verify.
6) Now enter the 11 digit TIN number.
7) The system will prompt you the dealer details of the corresponding TIN.

Revised list of document for opening of bank account of Sole Proprietorship Firm

RBI/2011-12/506 DBOD. AML.BC. No 93 /14.01.001/2011-12                    April 17, 2012


The Chairmen / Chief Executive Officers

All Scheduled Commercial Banks (excluding RRBs)/

All India Financial institutions/ Local Area Banks


Dear Sir,


Know your Customer (KYC) Guidelines – Accounts of Proprietary Concerns

1. Please refer to our circulars DBOD. AML BC. No. 80/14.01.001/2009-10 dated March 26, 2010 and DBOD. AML.BC. No. 38 /14.01.001/2010 -11 dated August 31, 2010regarding customer identification procedure for opening accounts of proprietary concerns.


2. On a review, it has been decided to include the following documents in the indicative list of required documents for opening accounts of proprietary concern:


i) The complete Income Tax return (not just the acknowledgement) in the name of the sole proprietor where the firm’s income is reflected, duly authenticated/ acknowledged by the Income Tax Authorities.

ii) Utility bills such as electricity, water, and landline telephone bills in the name of the proprietary concern.



Yours faithfully,

(Sudha Damodar)

Chief General Manager

Delhi VAT Circular No. 9 Central Sales Tax Act 1956 – Framing of assessments

VAT, Indirect Tax, VAT – Delhi

Delhi VAT Circular No. 9 dated 9 June 2011 [No. F.6(85)-Policy-VAT-2011-147-154]

09 Jun 2011

Central Sales Tax Act 1956 – Framing of assessments

Section 9(2) of CST Act, 1956 empowers the assessing authorities to frame assessments in accordance with the provisions contained in general sales tax law of the appropriate state which is Delhi Value Added Tax act, 2004 in case of Delhi.

2. Circular for framing central assessments have been issued in the past also. Circular No. 13 of 2007-08 dt 30/01/08 and Circular No. 15 of 2006-07 dt. 30/03/07 may also be referred in this regard.

3. The time limit for furnishing statutory forms is three months after the end of each quarter to which the declarations or statutory forms relates. Second provision to Rule 12(1) of Central Sales Tax (Registration and Turnover) Rules, 1957 provides for covering all transaction of sale, which take place in a quarter of financial year between same two dealers. The prescribed time of three months is sometimes extended to a quarter or more than quarter at times centrally by Commissioner, VAT in exercise of the powers conferred under relevant provisions of Central Sales Tax (R and T) Rules, 1957 and DVAT Rules, 2005.

4. It has also come to notice that some assessing authorities are issuing manual assessment order in contravention of instructions contained in Circular No.15 of 2006/07.



5. In order to liquidate all pending assessments of deficient central statutory forms cases, it has been decided to adher to following time schedule:

S. No. Assessment Year Quarter Date by which assessments to be completed

1 2007-08 Qtr. II Qtr. III and Qtr. IV 30-06-2011



2 2008-09 All Quarters 31-12-2011


3 2009-10 All Quarters 31-03-2012
4 2010-11 All Quarters 30-06-2012


6. If time permits, assessing authorities may take up the cases for assessment even before the dates indicated in Col. 4 above. However, no case pertaining to any year for deficiency of statutory forms should remain un-assessed beyond the dates indicated above, it shall be personal responsibility of each Assessing Authority in respect of their assigned work.

7. While taking up a case for assessment due to deficiency of statutory forms, other aspects like scrutiny of balance sheet (for dealer having GTO > Rs.40.00 lakh), timely filing of returns, timely payment of due tax under both the Acts, tax credit availed on purchased locally, adjustment of tax credit, reversal of tax credit on transfer of goods after local purchase, tally of return version with balance sheet etc., may also be looked into.

8. For dealers who are not engaged in central sale in particular period/year, no reconciliation is required.

9. This issues with the approval of Commissioner, VAT.


G.C. Tolani

VATO (Policy)



  1. The basic exemption limit in the case of individuals increased from Rs.1.60 lacs to Rs.1.80 lacs. However, there is no increase in basic exemption limit in the case of Resident Women who is below 60 years at any time during the previous year.
  2. The qualifying age limit for senior citizens has been lowered from 65 years to 60 years and  increased the current exemption limit under two categories
  3. Category -1 – Age of Individual – 60 years or more but less than 80 years at any time during the previous year. The basic exemption limit is increased from Rs.2.40 lacs to Rs.2.50 lacs
  4. Category – 2 –   Age of Individual beyond 80 years or more at any time during the previous year. The basic exemption limit is Rs.5.00 lacs.
  5. In the case of domestic companies the surcharge has been reduced from Rs.7.5% to 5%
  6. In the companies other than domestic companies the surcharge has been reduced from 2.5% to 2%
  7. The definition of charitable purpose u/s 2 (15) includes “the advancement of any other object of general public utility”. The monetary limit in respect of such activities has been enhanced from Rs.10.00 lacs Rs.25.00 lacs.
  8. The amount paid by an assessee as an employer by way of contribution towards pension scheme, as referred to in sec 80CCD(2) on account of an employee to the extent it doesn’t exceed 10% of the salary of employee in the previous year, shall be allowed as a deduction u/s 36 in computing the income under the head profit and gains of business or profession.
  9. The Indian company which receives foreign dividend from foreign subsidiary company such dividend is taxable at the 15% as against 30% plus applicable surcharge.
  10. The rate of MAT is increased to 18.5% from the existing rate of 18% of such book profit.
  11. Minimum Alternative Tax has been introduced for Limited Liability Partnership (LLP) in line with MAT on companies with effect from the Assessment Year 2012 – 2013.
  12. The Government  exempts assessees having no other income other than salary from furnishing the return of income by notification. The proposed amendment shall be effective from 1st June, 2011.
  13. It is proposed to omit the requirement of quoting of Documentary Identification Number in notices / order / correspondences issued by Income tax department.
  14. The SEZ developers are required to pay dividend distribution tax on dividends declared / distributed on or after 1st June, 2011.
  15. The deduction u/s 80CCF to investment in notified long term infrastructure bonds extended for the A.Y. 2012-13 also.
  16. Liaison offices of a company will be required to file Annual Information in the prescribed form with in the 60 days from the end of the financial year.
  17. The tax holiday for power sector has been extended for further period of one year i.e. upto 31.03.2012.



  1. The following two new services have been proposed
    1. Services by air conditioned restaurants having licence to serve liquor; and
    2. short term accommodation hotels / inns / clubs / guest houses etc.


  1. The monetary limit for adjustment of excess service tax paid is increased from Rs. 1.00 lacs to Rs.2.00 lacs.
  2. The penalty for delayed payment of service tax u/s 76 has been reduced from 2% to 1% per month or Rs.100 per day whichever is higher.
  3. The maximum penalty reduced to 50% of the tax.
  4. The rate of interest is reduced by 3% for assesses with turnover of upto 60 lacs.
  5. The maximum penalty for delay in filing of return increased from Rs.2,000 to Rs.20,000

Courtesy: CA. Naveen ND Gupta


Announcement of New USA Branch of MRC

We are delighted to inform you that Mukesh Raj & Co. (MRC) has inagurated its first foreign branch office at New Jersey, United States Of America. The new foreign office address is:

MRC (Chartered Accountants) 85, Forest Drive, Apartment C Springfield,

New Jersey – 07081, United States of America (USA)

We would concentrate to provide services in relation to US taxation and Accounting. We would be happy to assist you and your team members to provide our professional and IRS services from our USA office.

Warm Regards MRC Team

Delhi VAT Budget 2010 Proposals

Ca. Vinay Bhushan

VAT rates of various commodities in Delhi, which are less than the rates suggested by the Empowered Committee of State Finance Ministers, are termed as deviations. A number of deviations have been done in the past. On account of these deviations Delhi Government have incurred losses in revenue collection as well as reduced compensation from the Central government. It has been proposed to remove such deviations on items / commodities and levy VAT as follows:-

From exempted 0% to 5%

1. Compressed natural gas (CNG) for use in transport sector

2. Rassi, Ban & Newar

3. Bio inputs like Fertilizers and Micro-nutrients and plant growth promotors

4. Kerosene stoves, lanterns and petromax and their spares

5. Embroidery and zari items

From exempted (0%) to 12.5%.

1. Motion Picture distribution when treated as right to use goods

2. Plastic scrap/ glass scrap.

From 5% to 12.5%

1. All other scraps

2. Dry fruits and kesar and magaj of all kind

3. Desi Ghee

4. Household plastic items

5. Plastic and tin containers including barrels

6. Wood and timber and plywood and laminated boards

7. Fitting for doors and windows and furniture

8. Wire mesh and metal mesh

9. Paintbrushes

10. Tractor tyres and tubes

11. Cocoa and coffee including coffee beans

12. Invertors

13. All Utensils and cutlery items (including Pressure cookers / Pans) except those made of precious metals

14. Fertilizers, pesticides, weedicides, insecticides, herbicides, rodentecides and plant growth regulators (other than those covered in First Schedule)

15. Glucose D

16. Locks

17. Weights and Measures

18. Fibre Board and particle board

19. Tea

Diesel From 12.5% to 20%

Concessions continue on following items :

1. Kirana Items except dry fruits, kesar and magaj of all kind

2. Foodgrains, Atta, Maida, Suji

3. Amla, Harad, Bahera, Shikakai, Supari, Ratanjot, Khusak, Pudina

4. Hawan Samagri and Incense Sticks

5. Unbranded goli and toffee

6. Midday Meal supplied by agencies approved by the Delhi Govt. and Local Bodies to schools

7. Jute and all kind of jute products including natural dyes and bleached, diversified, plain and laminated jute products

8. School Bags with MRP upto Rs.300/-

9. Tricycles meant for use by persons with disability

10. Blood filters

11. Compact Fluorescent Lamp and electronic Choke

12. Natural Gas and R-LNG (Re-gassified Liquid Natural Gas) sold to power generation companies owned by Government of NCT of Delhi for generation of power meant for sale in Delhi)

13. Piped Natural Gas

Luxury Items :- It is proposed to increase VAT on writing instruments costing above Rs.1,000/- from present 5% to 12.5%, watches above Rs.5,000/- from 12.5% to 20%, Mobile Phones and all mobile accessories above Rs.10,000/- from 5% to 12.5%, readymade garments above Rs.5,000/- from 5% to 12.5%. This measure is likely to generate approximately Rs.100 crores as additional revenue.

It is proposed to enhance VAT on aerated drinks from 12.5% to 20% as a measure to generate additional revenue to the tune of Rs.10 crores.

To give relief to Thalesemia patients we have already exempted “Desferrioxamine” “Deferiprone” and Blood Filters (Lucocites Filter) used for treatment of Thalassemix. I also propose to exempt new Oral Iron Chelator Defarasirox by including it in the First Schedule of the Act.

Government of Delhi has constituted the Delhi Dispute Resolution Society with the objective to establish institutionalized mechanism of alternate dispute resolution. I propose to frame a mechanism of mediation to resolve disputes of Sales Tax / Value Added Tax cases by appropriately amending the DVAT Act, 2004.

Subsidy on Domestic LPG:-

Due to subsidy of Rs.40/- on domestic LPG cylinder (14.2 Kg.), Government of Delhi is bearing a burden of approximately Rs.160/- to Rs.170 crores per annum. It is proposed to withdraw this subsidy.

Stamp & Registration

The registration fee charged on various documents under Indian Registration Act, as applicable to Delhi, is meager. The maximum registration fees is Rs.100/- in NCT of Delhi. It is proposed to bring it at more realistic level by raising maximum registration fee to Rs.500/- and registration fees in other slabs will also be enhanced proportionately. It is likely to generate additional revenue of Rs.6 crores.

(Please note that these are only proposals and will be effected only after passing of the budget and notification)

Budget-2010-Indirect Tax Proposals

Indirect Taxes

Custom & Excise.

  • The standard rate on all non-petroleum products enhanced from 8 per cent to 10 per cent ad valorem.
  • The specific rates of duty applicable to portland cement and cement clinker also adjusted upwards proportionately. Similarly, the ad valorem component of excise duty on large cars, multi-utility vehicles and sports-utility vehicles increased by 2 percentage points to 22 per cent.
  • Restore the basic duty of 5 per cent on crude petroleum; 7.5 per cent on diesel and petrol and 10 per cent on other refined products. Central Excise duty on petrol and diesel enhanced by Re.1 per litre each.
  • Some structural changes in the excise duty on cigarettes, cigars and cigarillos to be made coupled with some increase in rates. Excise duty on all non-smoking tobacco such as scented tobacco, snuff, chewing tobacco etc to be enhanced. Compounded levy scheme for chewing tobacco and branded unmanufactured tobacco based on the capacity of pouch packing machines to be introduced.

Agriculture & Related Sectors

  • Provide project import status with a concessional import duty of 5 per cent for the setting up of mechanised handling systems and pallet racking systems in ‘mandis’ or warehouses for food grains and sugar as well as full exemption from service tax for the installation and commissioning of such equipment.
  • Provide project import status at a concessional customs duty of 5 per cent with full exemption from service tax to the initial setting up and expansion of Cold storage, cold room including farm pre-coolers for preservation or storage of agriculture and related sectors produce ; and Processing units for such produce.
  • Provide full exemption from customs duty to refrigeration units required for the manufacture of refrigerated vans or trucks.
  • Provide concessional customs duty of 5 per cent to specified agricultural machinery not manufactured in India;
  • Provide central excise exemption to specified equipment for preservation, storage and processing of agriculture and related sectors and exemption from service tax to the storage and warehousing of their produce; and

• Provide full exemption from excise duty to trailers and semi-trailers used in agriculture.

  • Concessional import duty to specified machinery for use in the plantation sector to be, extended up to March 31, 2011 along with a CVD exemption.
  • To exempt the testing and certification of agricultural seeds from service tax.
  • The transportation by road of cereals, and pulses to be exempted from service tax. Transportation by rail to remain exempt.
  • To ease the cash flow position for small-scale manufacturers, they would be permitted to take full credit of Central Excise duty paid on capital goods in a single installment in the year of their receipt. Secondly, they would be permitted to pay Central Excise duty on a quarterly, rather than monthly, basis.


  • To build the corpus of the National Clean Energy Fund, clean energy cess on coal produced in India at a nominal rate of Rs.50 per tonne to be levied. This cess will also apply on imported coal.
  • Provide a concessional customs duty of 5 per cent to machinery, instruments, equipment and appliances etc. required for the initial setting up of photovoltaic and solar thermal power generating units and also exempt them from Central Excise duty. Ground source heat pumps used to tap geo-thermal energy to be exempted from basic customs duty and special additional duty.
  • Exempt a few more specified inputs required for the manufacture of rotor blades for wind energy generators from Central Excise duty.
  • Central Excise duty on LED lights reduced from 8 per cent to 4 per cent at par with Compact Fluorescent Lamps.
  • To remedy the difficulty faced by manufacturers of electric cars and vehicles in neutralising the duty paid on their inputs and components, a nominal duty of 4 per cent on such vehicles imposed. Some critical parts or sub-assemblies of such vehicles exempted from basic customs duty and special additional duty subject to actual user condition. These parts would also enjoy a concessional CVD of 4 %.
  • A concessional excise duty of 4 per cent provided to “soleckshaw”, a product developed by CSIR to replace manually-operated rickshaws. Its key parts and components to be exempted from customs duty.
  • Import of compostable polymer exempted from basic customs duty.


  • Project import status to ‘Monorail projects for urban transport’ at a concessional basic duty of 5 per cent granted.
  • To allow resale of specified machinery for road construction projects on payment of import duty at depreciated value.
  • To encourage the domestic manufacture of mobile phones accessories, exemptions from basic, CVD and special additional duties are now being extended to parts of battery chargers and hands-free headphones. The validity of the exemption from special additional duty is being extended till March 31, 2011.

Medical Sector

  • Uniform, concessional basic duty of 5 per cent, CVD of 4 per cent with full exemption from special additional duty prescribed on all medical equipments. A concessional basic duty of 5 per cent is being prescribed on parts and accessories for the manufacture of such equipment while they would be exempt from CVD and special additional duty.
  • Full exemption currently available to medical equipment and devices such as assistive devices, rehabilitation aids etc. retained. The concession available to Government hospitals or hospitals set up under a statute also retained.
  • Specified inputs for the manufacture of orthopaedic implants exempted from import duty.


• To address the difficulties experienced by film industry in importing digital masters of films for duplication or distribution loaded on electronic medium vis-à-vis those imported on cinematographic film, owing to a differential customs duty structure, customs duty to be charged only on the value of the carrier medium. The same dispensation would apply to music and gaming software imported for duplication. In all such cases the value representing the transfer of intellectual property rights would be subjected to service tax.

  • Provide project import status at a concessional customs duty of 5 per cent with full exemption from special additional duty to the initial setting up “Digital Head End” equipment by multi-service operators.

Precious Metals

  • Rates on precious metals indexed as follows:

: On gold and platinum from Rs.200 per 10 grams to Rs.300 per 10 grams

: On silver from Rs.1,000 per kg to Rs.1,500 per kg.

  • Basic customs on Rhodium – a precious metal used for polishing jewellery reduced to 2 per cent.
  • Basic customs duty on gold ore and concentrates reduced from 2 per cent ad valorem to a specific duty of Rs.140 per 10 grams of gold content with full exemption from special additional duty. Further, the excise duty on refined gold made from such ore or concentrate reduced from 8 per cent to a specific duty of Rs.280 per 10 grams.

Other Proposals

  • Full exemption from import duty available to specified inputs or raw materials required for the manufacture of sports goods expanded to cover a few more items.
  • Basic customs duty on one of key components in production of micro-wave ovens, namely magnetrons, reduced from 10 per cent to 5 per cent.
  • Value limit of Rs. 1 lakh per annum on duty-free import of commercial samples as personal baggage enhanced to Rs. 3 lakh per annum.
  • Complete exemption from special additional duty provided to goods imported in a pre-packaged form for retail sale. This would also cover mobile phones, watches and ready-made garments even when they are not imported in pre-packaged form. The refund-based exemption is also being retained for cases not covered by the new dispensation.
  • Toy balloons fully exempted from Central Excise duty.
  • Reduction in basic customs duty on long pepper from 70 per cent to 30 per cent;
  • Reduction in basic customs duty on asafoetida from 30 per cent to 20 per cent;
  • Reduction in central excise duty on replaceable kits for household type water filters other than those based on RO technology to 4 per cent;
  • Reduction in central excise duty on corrugated boxes and cartons from 8 per cent to 4 per cent;
  • Reduction in central excise duty on latex rubber thread from 8 per cent to 4 percent; and
  • Reduction in excise duty on goods covered under the Medicinal and Toilet Preparations Act from 16 per cent to 10 per cent.
  • Proposals relating to customs and central excise are estimated to result in a net revenue gain of Rs. 43,500 crore for the year.

Service Tax

  • Rate of tax on services retained at 10 per cent to pave the way forward for GST.
  • Certain services, hitherto untaxed, to be brought within the purview of the servicetax levy. These to be notified separately.
  • Process of refund of accumulated credit to exporters of services, especially in the area of Information Technology and Business Process Outsourcing, made easy by making necessary changes in the definition of export of services and procedures.
  • Accredited news agencies which provide news feed online that meet certain criteria, exempted from service tax.
  • Proposals relating to service tax are estimated to result in a net revenue gain of Rs 3,000 crore for the year.
  • Proposals on direct taxes estimated to result in a revenue loss of Rs. 26,000 crore for the year.
  • Proposals relating to Indirect Taxes estimated to result in a net revenue gain of Rs.46,500 crore for the year. Taking into account the concessions being given in the tax proposals and measures taken to mobilise additional resources, the net revenue gain is estimated to be Rs. 20,500 crore for the year.

Tax Treatment of Goods sent to other States ubder Maharastra VAT


Trade Cir.No.-2T of 2010, Date: 11/01/2010

Sub: Tax Treatment of Goods sent to other States.

This office had issued above referred Trade Circulars explaining scope of section 6A of CST Act, 1956. In the Trade Circular dated 20th February 2007, a view had been taken that section 6A of CST Act, 1956 deals only with transactions between principal and agent and that it applies in those cases where the movement of goods is to the place of business of the dealer himself in another state or to his agent or his principal in another state. It was viewed that section 6A does not deal with transactions which are on a principal to principal basis. Hence, the non-sale transactions like job work which are transactions from principal to principal basis were viewed to be out of purview of section 6A of CST Act, 1956 and not retiring F Forms.

2. Thereafter, the Allahabad High Court delivered a Judgement dated 17th August, 2007 in the case of M/s Ambica Steels Ltd. V/s the State of Uttar Pradesh. The issue before the Court was whether the petitioner is required to submit the declaration in Form F in respect of the transaction of job work performed by it. The High Court decided that it would be necessary to furnish declarations in Form F in such instances. In view of this Judgement, it was decided to issue F Forms to the dealers in Maharashtra who received goods for job work or as goods return. This aspect has been elaborated in Trade Circular 5T of 2009 dated 29th January 2009.

3. The decision of Allahabad Hicdi Court in M/s Ambica Steels Ltd was challenged before the Hon’ble Supreme Court. In the brief order passed by the Hon’ble Supreme Court (24 VST 356) in this case, it is stated that the dealer agreed to produce the retired declarations. Hon’ble Supreme Court has not done away with the need of mandatory F Forms applicable to such transactions as job work which was outcome of the Allahabad High Court decision. In view of this, the decision of the Allahabad High Court in case of M/s. Ambica Steel Ltd. (12 VST 216) stands and following instructions are issued.

4. The Trade Circular 16T of 2007 dated 20th February 2007 and Trade Circular 5T of 2009 dated 29th January 2009 are hereby withdrawn. F forms are mandatory for all transactions of inter state transfers (not by way of sale) including job work and goods return. Declarations in Form F will be issued to the dealers to comply with this view.

5. This Circular cannot be made use of for legal interpretation of the 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.

6. You are requested to bring the contents of this circular to the notice of all the members of your Association.

Yours faithfully,

(Sanjay Bhatia) Commissioner of Sales Tax, Maharashtra State, Mumbai

Ref: 1. Trade Circular 16T of 2007 dated 20th February 2007. 2. Trade Circular 5T of 2009 dated 29th January 2009.

VAT Rate 4 % to 5% in Delhi w.e.f. 13-01-2010


(As passed by the Legislative Assembly of the National Capital Territory of Delhi on the 16th December,2009)

(Date of Approval -1st January, 2010)

Published in Notification Dated 6-1-2010 [F.14(16)/LA-2009/LJ/10/LC LAW/1]

An Act to further amend the Delhi Value Added Tax Act, 2004

BE it enacted by the Legislative Assembly of the National Capital Territory of Delhi in the Sixtieth Year of the Republic of India as follows:—

1. Short title, extent and commencement.—(l) This Act may be called the Delhi Value Added Tax (Amendment) Act, 2009.

(2) It extends to the whole of the National Capital Territory of Delhi.

(3) It shall come into force on such date as the Government may, by notification in the Official Gazette, appoint.

2. Amendment of Section 4.- Inthe Delhi Value Added Tax Act, 2004 (Delhi Act 3 of 2005)(hereinafter referred to as “the principal Act”), in Section 4, in sub-section (1),for clause (b), the following clause shall be substituted, namely:-

‘(b) in respect of goods specified in the Third Schedule, at the rate of five paise in the rupee:

Provided that tax shall be paid at the rate of four paise in the rupee of the taxable turnover of the dealer pertaining to declared goods, as defined from time to time in the Central Sales Tax Act, 1956(74 of 1956);”.

3. Amendment of Section 9.—In the principal Act, in Section 9,—

(a) in sub-section (1), for the words “where the purchase arises”, the words “to the extent of proportion of the goods which have been put to sale” shall be substituted

(b) in sub-section (2), after clause (f), the following clause shall be inserted, namely:—

“(g) to the dealers or class of dealers unless the tax paid by the purchasing dealer has actually been deposited by the selling dealer with the Government or has been lawfully adjusted against output tax liability and correctly reflected in the return filed for the respective tax period.”

4. Amendment of Section 10.—In the principal Act, in Section 10, after sub-section (4), the following sub-section shall be inserted, namely:-

“(5) Where the goods which have been purchased by a dealer are sold at a price lower than the price at which it was purchased by the dealer, the tax credit on such purchases shall be reduced proportionately in the tax period during which the goods are sold.

Explanation—The tax credit claimed on a particular purchase shall not exceed the amount of tax payable on its sale.”

5. Amendment of Section 74.—In the principal Act, in Section 74, in sub-section (10), for the Word “five”, the word “six” shall be substituted.

6. Amendment of Section 74A.—In the principal Act, in Section 74A, after sub-section (4), the following sub-section shall be Inserted, namely

“(5) Notwithstanding anything contained in any judgment, decree or order of any court, the provisions of this section shall be deemed to have come into effect with effect from the 1st April, 2005.”

7. Substitution of new section for Section 103.—In the principal Act, for Section 103, the following section shall be substituted, namely

“103. Power to amend Schedules.—(1) If the Government is of opinion that it is expedient in the interest of general public so to do, it may, by notification in the Official Gazette, add to, or omit from, or otherwise amend, the First, the Second, the Third, the Fourth, the Fifth, the Sixth, or the Seventh Schedules, either retrospectively or prospectively, and thereupon the said Schedules shall be deemed to have been amended accordingly.

Provided that no such amendment shall be made retrospectively if it would have the effect of prejudicially affecting the interests of a dealer.

(2) The Commissioner may, on the recommendation of the Ministry of External Affairs, Government of India, if he is of opinion that it is expedient in the interest of general public so to do, by a notification in the Official Gazette, add to, or omit from, or otherwise amend, the Sixth Schedule.””

By Order and in the Name of the Lt. Governor of the NationalCapitalTerritory of Delhi,


Please Find enclosed the notification for effective date of change of notification.


Indian Goods & Service Tax: Proactive actions for Indian Inc.

By CA. Vinay Bhushan

“Proactive action is always the best approach to deal with challenging matters before they get out of hand”

Is Indian Inc. really ready to adopt Goods and Service Tax (‘GST”)? The answer of this question is really tough in the current scenario. Presently, Indian Inc. is bound to comply with multi taxes and sufferings in term of high tax cost. Short span of time provided to readjust and realign it business process will increase suffering further. How Indian Inc. can realign its business model, supply chains, logistics with in few month and how anyone can expect this!! Following are the few points on which Indian Inc. should act proactively on the new proposed GST model.

Business Strategy/Pricing Policy/Logistics

Impact of tax cost on pricing policy should be reviewed as per new GST rates on inputs/ final products. Options of backward and forward integration in terms of overall tax cost and efficiency may be explored.

Feasible study of inter state supplies or warehousing in terms of new valuation rules of goods and services would be the need of hour. Further, supply chain and distribution channels may need a review as per the new regulations.

First discussion paper on GST affirms few positions, like applicability of Integrated Goods and Service Tax (IGST) on inter state transaction, allowance of cross credit among goods and services, non allowance of credit among State GST and Central GST. Indian Inc. can evaluate the different feasible options and plan proactively the future course of action.

Abolition of Central Sales Tax (“CST’):

Revenue authorities are committed to abolish CST from April 01, 2010. On this auspicious day Indian Inc. would say good bye to CST and will welcome GST (may be delayed for further few months!!). Inc. engaged in manufacturing which are having presence on pan India basis needs adjustments/realignments in the supply chain due to abolition of CST. The cost benefit analysis of distribution cost vs. warehousing cost should be done to evaluate the tax impact on the products.

Statutory Concessional Forms:

Next action point for Indian Inc is the collection of statutory concessional forms. Form F (concessional form for branch transfer) may be the internal matter of the trade and easy to coordinate among the branches; will not pose as a big challenge. The bigger challenge is to collect Form C (concessional form for inter state sale). Proper strategy on coordination with the buyer would minimize the tax liability and future exposure.

Location Based Exemptions:

Inc. having manufacturing facilities in the state of Uttaranchal, Himachal Pradesh and availing location based exemptions need to review their business model. Present scheme of exemption may be adopted by GST in the form of first pay and then refund scheme. This scheme will definitely increase the working capital requirement of the company. Further getting refund would also require documentation and have administration cost. A study on the requirement of additional working capital would be required. Administration Cost Vs. exemption benefits should be evaluated to determine the best available option.

Export obligations:

Most of the export promotions schemes like EPCG, SEZ and EOUs are attached with export obligations, which are calculated as per the current tax rates. Inc. availing export promotions schemes should do a study of impact of the GST and need to re-calculate the duty obligation with respect to the export as per the new rates. Surety Bonds executed with the revenue authorities would require a suitable amendment in view of changed liability as per the applicable GST.

Changes in the ERP System:

GST will come with the new tax rates; new formats of the invoices, returns, challan would also be amended as per the GST requirement. ERP need to be amended in terms of the above changes. Accounting entries for GST would also be required to amend as per the new tax model.

Training of the Middle Management:

Management should be ready to adopt the changes in the minimum period of time. As per the discussion paper, each state will have its own legislation. However, uniformity on the broad issues has been assured by discussion paper. In light of changed legislations, rates, formats core tax team should be prepared and well trained.