-会计科目、主要账务处理和财务

1、AMENDMENTS IN DELHI VALUE ADDED TAX& IMPACT ON BUILDERS Sushil AggarwalAnil Sushil & Co. Chartered Accountant1, Temple Complex, Shiv Mandir, Tilak Bridge, New Delhi 110 001.Ph. 2337 1637, 2337 1937 PRESENTATION for NIRC 1AMENDMENTSCapital Goods broader definitionSch.VII - non-creditable goods expand

2、edLiability of organiser of exhibitionInterstate movement for job workTaxability of goods supplied by contracteeSpecial wct ratesPower conferred to resize tax periodDiscretionary powers with commissioner.Input credit disallowed for labour jobs2AMENDMENTSLimit of 20000 for tdsNew Time Limits for TDS

3、& Goods ReturnRate of Interest on refund reduced Scheme of composition for civil contractors, Medicine Traders and bullion traders.Rationalize tax liability on work contracts entered prior to 01.04.2005 Rate adjustments in Budget 2006-07CST changesImpact of VAT on BuildersRecent determinations / cla

4、rificationsProcedural changesThanks3PROCEDURAL CHANGESAdvance (WC) taxable on appropriationDefault assessment for year by single order Concept of electronic filing of returnsProvisions to transfer the refund amount through ECS PAN is to be intimated on Form DVAT-52 latest up to 31st March 06.Penalty

5、 of Rs. 10000 for non-compliance.Input credit on second hand goodsComposition to voluntary registrants too.Penalty for delay in applying for registration or delay in filing of return to apply from after the due date.4Capital Goods broader definitionThe definition of Capital Goods has been amended. T

6、he words “Directly & Indirectly” have been added. Also the words “ or for execution of works contracts in Delhi” have been added. Thus direct relation of capital goods to manufacturing shall not be mandatory. And machinery for works contracts shall also be entitled clearly. Definition has been broad

7、ened.5Sch.VII - non-creditable goods expandedContrary to the spirit in broadening of the definition of capital goods, schedule VII of the DVAT Act, describing non-creditable goods, has been amended to include many more items like office equipments, air conditioning plant, coolers, fans, furniture, c

8、arpet, stationary items, lifts, computers, all kind of motor vehicles etc. on which Input Tax Credit can not be claimed, if used as Capital goods. In a way it sounds more uncontroversial. 6Sch.VII - non-creditable goods expandedIt may be interesting to note that cranes, earth movers, JCB, road rolle

9、rs, concrete mixers etc. as part of this schedule are not eligible for input credit unless these are used for resale in unmodified form. Firstly in case these items are put on hire (RTU) input credit should be available. Secondly Clause XV of the schedule includes: “Goods used for construction of or

10、 incorporation in civil structure.not constituting part of work contract”. Goods include “capital goods”. Machinery used in taxable construction activity should thus be eligible for input credit. 7Liability of organiser of exhibitionThe person organizing an exhibition shall be required to ensure tha

11、t all participants obtain registration under the Act, maintain record of all goods brought or kept in stock or sold by the participant. In the event of default the tax liability shall accrue in the hands of the organizer 8Interstate movement for job workThe condition of return of goods (from Stock T

12、ransfers) in same form to re-avail the input tax credit which was denied earlier, has been removed. Now input credit can be claimed back in respect of raw material or other goods transferred for processing or manufacturing at the time of return of such goods back even when the shape of goods changes

13、 before return. 9Taxability of goods supplied by contracteeIt has been clarified that the goods supplied by the contractee which remain to be the property of the contractee during and after execution of the contract and for which no adjustment is required in the value of the contract awarded to the

14、contractor, no liability to VAT shall arise. This shall become a major planning tool as bill for material shall always be taken in the name of the contractee.10Special wct ratesFor contracts in the nature of printing the rate of tax shall be 4% (w.e.f. 1-04-2005). A new rule is inserted to clarify t

15、hat Adjustment of tax due to reduction in tax liability w.e.f. 01.04.2005 on certain transactions, say for printers, can be made subject to the return of the excess tax to the customer and making claim and attaching proof thereof with the return for the month of November05 (in case of monthly return

16、s) or the quarter ended 31.12.2005 as the case may be. No condonation or second opportunity is provided in case of non compliance of any of the three conditions.11Special wct ratesIn case of a Works Contract involving transfer of property in declared goods, in the same form in which they were purcha

17、sed by the contractor, the rate of tax shall be 4% and not 12.5% of the turnover pertaining to such declared goods. This provision shall apply from 01-04-200512Power conferred to resize tax periodTwo more tax periods have been prescribed. ONE YEAR for the dealers having turnover in the preceding yea

18、r upto 10 lakh and SIX months for upto 50 Lakh but more than 10 Lakh. Further time to in case of YEARLY return is 75 days whereas in case of HALF YEARLY return, it is 45 days. It may be noted that time to grant refund has already been increased to 2 months in case of Quarterly returns and to One mon

19、th in case of Monthly returns from 28 days. Nothing has been prescribed in case of the new tax periods.However any such dealer can opt tax period of his choice by informing on DVAT-55 by 15th of April in every year. It is further notified that in either of the tax periods (annual or half yearly), ta

20、x is to be deposited quarterly.13Discretionary powers of CSTSec. 40A: Power to declare agreements to be null and void if they aim at tax evasion by reducing tax liability or increasing input credit. Extends to all persons and transactions. The CST has power to increase tax liability or reduce credit

21、 consequently.Sec.46A empowers CST to provisionally attach property for 6 months extendible to 2 years, during course of any inquiry or proceedings, in the interest of revenue. Sec. 43 & 44 give extensive powers to CST to recover tax.Powers for rectification of mistakes and review have been introduc

22、ed. The review may take place suo-motu or on application filed with in four years from delivery of the order. 14Input credit disallowed for labour jobsInput credit (on consumable and capital goods) denied to a Job Worker who sells scrap / waste obtained during execution of job work. This should not

23、apply to with material contracts where VAT as wct is charged.15New Time Limits for TDS & goods returnThe time limit for deposition of TDS is reduced to 15 days instead of 28 days.TDS certificate to be issued in 7 days from payment or discharge. Penalty at Rs. 100 per day for delay beyond 7 days. For

24、 return of goods the time limit of 6 months has been incorporated by way of amendment to Section 8 (1) (d).16Rate of Interest on refund is reducedRate of Interest on refund is reduced from 8% to 6%. However interest on the delay in deposit of tax shall continue to be charged 15%.17Composition - Civi

25、l Contractors“Civil Construction” : (Construction, electrification, fitting out, improvement, repair of building-complex-bridge-flyover-dam-canal-road-similar activity /structure.)Eligible for 2.5% tax on turnover if making all purchases and sales only in Delhi. No turnover limit. Return Qtly.Eligib

26、le for 3% tax on turnover relating to Delhi if engaged in procuring or supplying from/to outside Delhi but not from outside the country. Use of forms (C,D,E,F) not permitted. No turnover limit. Return Qtly.Purchase from unregistered dealer (except first schedule items) not permitted.On default in fu

27、rnishing two consecutive returns-automatic withdrawal of scheme.18Composition Medicine TradersTurnover in the preceding year or estimated for the current year does not exceed one crore.Eligible for 1% tax on turnover. Qt. return period.Not eligible to make purchases and sales from outside Delhi.Purc

28、hase from unregistered dealer (except first schedule items) not permitted.On default in furnishing two consecutive returns-automatic withdrawal of scheme.19Composition Bullion TradersEligibility only for bullion traders. Jewelers can not claim benefit in the same firm.Applicable from May 1, 2006. No

29、 turnover limit. Quarterly return period.Eligible for 0.1% tax on turnover of bullion made in Delhi. Eligible to make purchases and sales from /to outside Delhi.Purchase from unregistered dealer not permitted.On default in furnishing two consecutive returns-automatic withdrawal of scheme.20Rationali

30、ze tax liability on work contract entered prior to 01.04.2005DAVT Act was amended to fix tax liability under the DVAT Act on works contracts entered prior to 01.04.2005 and whose execution continued on or after 01.04.2005, equal to that under the repealed Delhi Sales Tax on Works Contract Tax Act, 1

31、999. Now the rules have been amended to prescribe Form DVAT-53 and DVAT-54 to be filed with all the relevant documents, positively alongwith the return for the month/quarter ended December05. Such dealer shall further be required to alongwith his every return thereafter.21Budget 2006-07LPG and PNG t

32、o be placed in third schedule. (4%)Rubber, plastic and rexin footware with MRP less than 300 to have 0% VAT.Tax on wire mesh and metal mesh to be 4% (from 12.5%) in line with other hardware products.Tax on Desi Ghee to be 4% (from 12.5%). Tax on inverter to be 4% (from 12.5%) in line with UPS.Select

33、 electrical industrial inputs to be put to 4% list. Industrial Cables to be defined as per HSN entry 8544, 11,20, 30, 41, 49, 51, 60, 70 excluding non- industrial cable and wires of 0.5 to 6 meters. Tea, coffee, coffee beans, coco under 4%category.Blood components, thallasemia drugs, Havan Samagri,

34、aid & implements for handicapped - also to be 0%.22Electrical Industrial InputsWinding wires & stripsAmmeter, KWH meter, voltmeterInsulating materials, insulatorJointing materialsCircuit breakers, HRC fuse, thermostatElectrical and single phasing preventor and timers.23Concept of electronic filing o

35、f returnsIn terms of notification no. F 7(7)/POLICY-III/VAT/2005-06/2089 the commissioner has made it mandatory to file a return in electronic form in addition to the normal return, for cases where the tax under the Delhi Sales Tax Act or under the CST or under both Acts, for the year 200304 was Rs.

36、 50,00,000 or more and where monthly return is applicable. This shall apply from return for February 2006 which is to be filed by March 25, 2006. The time available for electronic return is 25 days and for physical copy is 28 days from close of the return period. Return is to be filed on using your

37、TIN as password. The physical printouts of the return will have unique number and the same prints need to be filed in physical form. 24Input credit on second hand goodsIn case of dealers of second hand goods the tax credit shall be available even if the tax was borne under DST Act at the time of pur

38、chase by the resident seller. Further the input credit shall be available even when the goods originally purchased change their shape in the hands of the dealer in second hand goods.25CST changesIn terms of CST (registration and turnover) Third Amendment Rules 2005, w.e.f. October 1, 2005, A single

39、declaration form may cover all transactions of sale taking place in a quarter of a financial year.Where deliveries in relation to a sale transaction are spread over several quarters or financial years it shall be necessary to furnish a separate form for deliveries in each quarter. The form (C, F, E-

40、1 or E-II) shall be furnished to prescribed authority with in three months ( or such further period as the prescribed authority may permit) from the end of the quarter to which it relates.26CST changesIn terms of circular 41 Dt. 14-12-2005 ( pending formal amendment in Rules) it is directed that Dec

41、laration forms for 1-04-05 to 30-09-05 may be issued as per old procedure. (i.e. apply in form 2C along with requisition account in form 2A to be filed together with the last return for the financial year.Declaration forms for the period 1-10-05 onwards may be issued as advance forms simply on the b

42、asis of a requisition in form 2C, irrespective of a pre-requisition in form 2A. Utilization may be filed in form 2B by 31-03-06 for OND quarter and by 30-06-06 for JFM quarter.27IMPACT OF VAT ON BUILDERSWorks Contract continues to haunt the professional and the dealer alike despite VAT as a unified

43、tax.The Issues are not only sale Vs. Works Contracts but also Sale Vs. Service.Rates of VAT are different for Sale and WCTreatment for labour and other charges is peculiar to WCTDS provisions exist for WC while no such provisions exist for sale.The builders lobby was shaken by the ads by CST invitin

44、g tax on sale of constructed property.28IMPACT OF VAT ON BUILDERSThe controversy started with the coverage of construction activity under the purview of Service Tax. The law assumed that a builder constructing flats for unknown buyers was rendering a service liable to service tax. As material is inv

45、ariably involved in construction activity the CST must have been overwhelmed to find this area in the VAT net.Further impetus gained on account of the SC verdict in K. Raheja Development corporation Vs. State of Karnatka (2005) 141 STC 298 29K. Rahejas CaseThe builder entered in to two separate agre

46、ements with the customer: for sale of share in land and paid stamp duty on thisFor construction of property subject to specifications and amenities against a lump sum price.The right to forfeiture and right to management were however retained by the builder.The Hon. Supreme Court observed that the d

47、efinition of work contract was wide enough and did not distinguish as to who undertakes the construction. 30K. Rahejas CaseThe court thus held that where even the owner of the property enters in to a contract for construction of property as per specifications in an agreement, it would be a taxable w

48、ork contract. It would be insignificant that the builder has a lien or right of forfeiture.However where the agreement is entered into after the construction of the property, tax would not apply. The case clarifies two situations: Where there are two agreementsWhere agreement is after construction.

49、31IMPACT OF VAT ON BUILDERSThe third situation is where there is a consolidated agreement for sale of flat after or before construction. Essentially stamp duty is paid on land value in first case, on full value in second case and on full value in the third case.Supreme Courts judgments in Hindustan

50、Shipyard Ltd. (2000) 119 STC 533 and in Kone Elevators (India) Ltd. (2005) 140 STC 22 have tried to resolve the sale Vs. work contract tangle. Where the dominant intention is supply and some work is ancillary then the transaction is a sale. If the dominant intention is providing a service and transf

51、er of property in goods is incidental it may be a WC. 32IMPACT OF VAT ON BUILDERSIf goods to be delivered as a whole have individual existence before sale as property of seller then it is sale even when goods are manufactured to the specifications of the buyer. Application of material is an accretio

52、n to the property of the seller and is not subject to accession by the buyer. If the service is to be performed in the thing to be produced as a whole and the seller has property only in materials used in the process it would be a WC. On application of material the contractee gets a right by accessi

53、on.Thus in the third situation it shall be difficult to impose VAT by treating it as a WC unless the intention is otherwise. 33Recent determinationsDeveloping the negatives and giving positive prints on photo paper is not work contract.While newspapers are specifically out of definition of goods, ne

54、ws as a product is a “goods” and like software, trademark, goodwill, lotteries,REP licenses and electricity it has marketability and is thus taxable at 12.5%.Stencils, erasers, pro-circles in loose form are not part of entry 76 Sch III (writing instruments, geometry boxes etc)Silver leaves are not p

55、art of “Articles of gold & silver (entry2 of sch II)Religious pictures printed on metallic foils are not religious pictures not for use as calendar (entry 4 of Sch.I) 34Recent determinationsPrinting of religious pictures is also exempt.M-Seal is not an adhesive (entry 68 sch.IIILubricants have been

56、held to be petroleum products and thus taxable at 20%.Drawer locks are not fittings for doors / windows / furniture. Entry 166 sch. III.In a clarification under section 85 of the Act the CST says that intrastate movement of goods on approval (otherwise to registered branches) shall be deemed as sale

57、.Where scrap (exempt from tax) is produced in a taxable manufacturing process the input credit on raw material shall be available proportionately.35Sushil AggarwalChartered Accountantanil.98110 81848Thank You36r#oWlTiQeNbJ8G5D1A-x*t$qYnVkSgPdMaI7F3C0z)v&s!pXmUiRfOcK9H6E2B+x(u%rZoWlThQeNbJ8G4D1A-w*t$

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