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What is VAT?
Value Added Tax (VAT) is a form of sales tax. It is collected in stages on transactions Involving sales of goods. Tax paid on purchases (input tax) is rebated against tax payable on sales (output tax). VAT is levied on sales of all taxable goods. VAT is not levied if sales of goods are not made in the course of or in furtherance of business.
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WHO SHOULD PAY VAT?
An individual, partnership, company etc., who sells goods in the course of business and who is registered or is required to register for VAT should pay VAT.
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WHEN IS VAT CHARGEABLE?
VAT is chargeable if the sales of goods:
are made in the State of Andhra Pradesh
are made by a VAT dealer in the State
are made in the course of or in furtherance of a business; and
are not specifically exempt or zero-rated.
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WHAT ARE TAXABLE SALES?
Sales of goods made in / or from the State of Andhra Pradesh, which are not exempt, are taxable sales.
e.g., Sale of exempt goods (Schedule I) is not a taxable sale.
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WHAT OTHER TAXABLE SALES MAY BE LIABLE TO VAT?
Other than your normal business sales, you should also account for VAT on the Following sales:
a: Sales to your staff or sales from vending machines;
b: Sales of business assets (e.g. Equipment, furniture, commercial vehicles);
c: Sales under Hire-purchase agreement or lease of goods to someone else;
d: Works contracts
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ARE THERE ANY OTHER KINDS OF SALES?
Apart from taxable sales, there are sales that the Value Added Tax Act, 2005 specifies as exempt.
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WHAT IS THE DIFFERENCE BETWEEN EXEMPT AND ZERO-RATED SALES?
With both zero-rated sales and exempt sales you don't charge VAT.
However, for zero-rated sales you are eligible to claim a tax credit for the input tax paid on your purchases;
(Example: If a dealer is making exports, he is eligible to claim Input tax on purchases made within the state, subject to conditions)
Whereas for exempt sales you are not eligible to claim a tax credit for the input tax paid on your purchases relating to such exempt sales.
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WHAT IS OUTPUT TAX?
It is the VAT chargeable on all the taxable sales made by a VAT dealer.
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WHAT IS INPUT TAX?
It is VAT charged on your purchases of goods. If you are registered for VAT you can normally claim a credit for the VAT charged on most business purchases.
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What is Taxable Turnover?
Taxable turnover is the aggregate total of sale prices of all taxable goods including goods taxable at zero rate. Sale price of goods and transactions exempted and VAT charged on taxable sales do not form part of Taxable Turnover.
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What is the VAT liability of branch transfers and Consignment sales?
Such transactions are exempt from VAT liability, but you are eligible to claim an input tax credit for the tax paid in excess of 4% on inputs.In inputs are purchased at 4 % Vat, then you are not eligible to claim ITC for this amount.
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What is meant by the term" DEALER" as per APVAT ACT?
The term "any dealer" for the purposes of VAT registration includes:
Sole Proprietor
Partnership
Private Company
Public Company
Government Enterprise
Club, Society or Association
Hindu undivided family
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WHO HAS TO BE REGISTERED FOR VAT?
Any dealer conducting a business or intending to conduct a business may apply to be registered for VAT. However all persons conducting a business must register for VAT from the date they commence business if they believe their taxable turnover will exceed a threshold of Rs.40 lakhs in 12 consecutive calendar months.
All dealers must register for VAT if their taxable turnover exceeds Rs.10 lakhs for the preceding three consecutive calendar months.
Regardless of their taxable turnover the following dealers must register for VAT at the commencement of their business:
Every dealer importing goods in the course of business from
outside the territory
of India;
Every person residing outside the State but carrying on
business within the State;
Every dealer registered or liable to be registered under
the Central Sales Tax Act
1956, or any dealer making purchases or sales
in the course of inter-state trade or
commerce or dispatches any goods to a place
outside the State otherwise than by
way of sale;
Every dealer liable to pay tax at Special rates specified
in Schedule VI of the AP
VAT Act 2005;
Every commission agent, broker, del credere agent,
auctioneer or any other
mercantile agent by whatever name called, who
carries on the business of buying,
selling, supplying or distributing goods on
behalf of his non-resident principal;
Every person availing an industrial incentive in the form
of a tax holiday or tax
deferment;
Every dealer executing any works contract exceeding Rs 5
lakhs for the State
Govt. or a local authority and any dealer
executing works contracts and opting
to pay tax by way of composition.
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CAN I APPLY FOR VOLUNTARY REGISTRATION?
Yes. However, your activities must constitute a business for VAT purposes and you will be required to meet the conditions laid down in the AP VAT Act 2005.
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WHEN DO I BECOME LIABLE TO REGISTER FOR VAT?
If you are in business in the categories listed in the Answer to the Question 1 above, you must register prior to the commencement of your business. For other businesses, if you are commencing a business and expect your taxable turnover toexceed, in 12 consecutive calendar months Rs.40 lakhs you must register for VAT at the commencement of the business.
If you intend to make inter-state purchases or sales or intend to dispatch goods outside the State other than by way of sale, then you must apply for VAT registration before applying for CST registration.
Other dealers have to consider their taxable turnover
for the preceding 3 months
and preceding 12 months. If during the past 3 months
their taxable turnover exceeded
Rs.10 lakhs, or exceeded Rs. 40 lakhs in the past 12
months, they must apply for
VAT registration by the 15th of the following month.
Illustration:
If your taxable sales exceeded Rs.10 lakhs during the preceding 3
months ending
August 2005 say on 25.08.2005, your liability to be
registered as VAT dealer arises
at the end of August 2005.
The time to apply for VAT registration in this case is
on or before 15.09.2005. You
will be registered with effect from 01.10.2005.This is
the date from which you are
liable to charge and pay VAT. For the earlier period
i.e., before 1.10.2005, you are
liable for TOT.
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HOW DO I CALCULATE MY TAXABLE TURNOVER?
Your taxable turnover is calculated on an ongoing basis. You should calculate at the end of each month the total value of taxable goods soldfor the preceding threemonths. Where the total exceeds Rs.10 lakhs you are required to apply for VAT registration. You should also see whether your taxable turnover for the preceding twelve months exceeds Rs.40 lakhs. If it exceeds Rs.40 lakhs you are required toapply for VAT registration.
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WHAT FACTORS DO I HAVE TO CONSIDER IN DECIDING WHETHER TO APPLY FOR VOLUNTARY VAT REGISTRATION?
In considering whether you should register voluntarily for VAT, you should ask yourself these questions:
a. Do I make taxable sales to other VAT dealers ?
If you are not registered for VAT you cannot issue tax invoices on which your customer VAT dealer can claim credit for the tax. Your
customer will therefore have to charge a higher price for his sales if he
cannot claim a credit for the VAT. In this case he might choose to trade with another VAT
dealer and you would lose business.
b. Do I trade, principally with non-VAT dealers/consumers ?
In this case it is likely to be in your interest not to register for VAT.
c. What are the obligations of VAT registration ?
Once registered, you will have to account for output tax that is attributable to your taxable sales. You will also have to submit VAT returns monthly to the Commercial Taxes Department and keep proper books of accounts.
If you decide to register voluntarily, the Law requires that you must
remain registered for VAT for a period of 24 months regardless of your taxable turnover.
d. Is my input tax credit likely to exceed the tax on the sales I make?
In this case you will benefit from VAT registration.
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IF I WANT TO REGISTER VOLUNTARILY, CAN THE COMMERCIAL TAXES DEPARTMENT REFUSE TO REGISTER ME?
Voluntary registration can be refused for one or more of the following reasons when an applicant:
Has no taxable sales;
Has no fixed place of business;
Does not keep proper accounting records;
Has not provided details of a bank account with any bank;
Has arrears outstanding under APGST Act 1957 or CST Act 1956 or AP VAT Act 2005;
Is not able to establish his identity.
Where the Commercial Taxes Department refuses an application for voluntary registration, the applicant has the right to raise an objection and to pursue the issue to a formal appeal.
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WHEN I REGISTER FOR VAT CAN I CLAIM A CREDIT FOR VAT I HAVE PAID ON MY GOODS IN STOCK AT THE TIME OF REGISTRATION ?
Yes. However to obtain this credit you must comply with the following conditions:
The goods, including capital goods must be on hand on the date of effective registration notified on your VAT Certificate of Registration.
The goods must have been purchased within the three months preceding the date of effective registration.
The goods must have been purchased from a VAT dealer and you must have an invoice (not a tax invoice) from a VAT dealer with his TIN on the invoice.
You must take inventory within 7 days of the date of effective registration.
YOU CANNOT CLAIM A CREDIT FOR TOT OR CST INCURRED BEFORE VAT REGISTRATION.
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HOW DO I REGISTER FOR VAT?
Applications for VAT registration must be made on form VAT 100 (“Application for VAT registration”), which is obtainable from your Tax Office. The form to apply for Registration VAT 100 is also available on the website of the CTD. You must fill in this form and submit it to the Tax Office.
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HOW DO I REGISTER FOR CST?
For getting registered under CST ACT prior registration under VAT is mandatory. The dealers who are registered under VAT can apply for CST registration in form CST A (“Application for CST registration”), which is obtainable from your Tax Office. The form to apply for Registration CST A is also available on the wesite of the CTD. You must fill in this form and submit it to the Tax Office.
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WHEN DO I START TO CHARGE VAT?
You should start keeping VAT records and charging VAT to your customers from the date notified to you by the Commercial Taxes Department. This will be the date shown as the effective date of your registration on your Certificate of Registration. You will have to account for VAT from that date.
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WHAT IS A START-UP BUSINESS?
This is a new business enterprise which requires a period of time to create an infrastructure before being in a position to commence business operations.
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WHAT SPECIAL PROVISIONS ARE PROVIDED IN VAT FOR STARTUP BUSINESSES ?
Normally dealers are registered only from the date they make taxable sales. However, in the case of Start-up Businesses a facility is provided in VAT to register them before they make any taxable sales. Such businesses can claim credits of VAT on their purchases for a period of 24 months while the business is being developed.
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HOW DO I TAKE ADVANTAGE OF THESE PROVISIONS?
You must apply for VAT registration on Form VAT 100 and for special registration as a Start-up business on Form VAT 104. The Commercial Taxes Department will need to be satisfied that you are setting-up a new business which will eventually make sales of goods on which VAT will be charged. You will have to furnish full details regarding the location of your business premises and a summary of your business plans.
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WHAT ARE THE CONDITIONS FOR REGISTRATION AS A START-UP BUSINESS?
You will need to satisfy the Commercial Taxes Department that:-
a You are setting up a new business;
b Your business will eventually make taxable sales. A new business, which will only make exempt sales, cannot be registered. The evidence required to satisfy the Commercial Taxes Department can be in the form of business plans, a feasibility study, proposed contracts, together with details of proposed capital assets and stock purchases;
c You will keep the prescribed books and records as required by VAT Act 2005 and the Rules to that Act;
d You accept that you can only remain registered without making taxable sales for a period of 24 months.
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WHEN DO I RECEIVE MY VAT REFUND?
You must complete a VAT return (Form VAT 200) to claim a credit. If you are registered for VAT as a start-up business you must file your VAT return by the 20th of the following month. The credit must be carried forward monthly until you commence making taxable sales. After you make taxable sales you will be entitled to a refund of the tax credit if you make exports outside India. Otherwise you will have to carry the credit forward until the month of March 2007 after the start of VAT and subsequently to March every year thereafter and make a claim. You will of course be able to offset the credit against the tax due on your taxable sales in the subsequent month/months. The refund will be made to you within 90 days from the date of receipt of the claim.
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WHAT HAPPENS IF I DO NOT RECEIVE MY REFUND BY THE END OF THE STIPULATED PERIOD ?
After you have filed your VAT return, the Commercial Taxes Department will carry out an audit visit. You must provide the tax officers with the necessary documents and records within a reasonable time-scale. If you have met your obligations and the Commercial Taxes Department fails to pay your refund by the due date, they will pay you interest at the rate of 1% per month for each month or part of a month that the refund due has not been paid.
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WHAT IS THE PROCEDURE FOR REGISTRATION AS A TOT DEALER?
Not apply for VAT registration you will be issued with a notification of General Registration as a TOT dealer, provided your taxable turnover exceeds Rs.5 lakhs but not Rs.40 lakhs for the 12 months ending 31-12-2004.
If you are applying for Registration as a TOT dealer under the APVAT Act 2005 on or after 1.4.2005, you must complete a simple application in form TOT 001 and take it to your Tax Office. You will receive a notice of General Registration if your application is satisfactory.
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WHAT ARE THE OBLIGATIONS OF A TOT DEALER ?
You must fulfill the following obligations:
a
You must file a quarterly return and pay the tax due for each quarter ending June, September, December and March by the end of the following month.
b
Failure to file the quarterly return and make the payments due can result in the imposition of penalties and interest charges.
c
A person registered for turnover tax cannot claim a credit for any VAT that he is charged in the course of his business or any turnover tax charged by his suppliers.
d A person registered for turnover tax cannot issue a Tax invoice.
(See FAQS "Turnover Tax Guide").
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WHAT MUST I DO IF THE DETAILS REGARDING MY REGISTRATION FOR VAT OR TURNOVER TAX CHANGE?
You must notify the office which issued your VAT Registration Certificate or TOT Notification of Registration in writing of the details of the changes within 14 days of the changes taking place.
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IS THERE ANY FORM PRESCRIBED FOR NOTIFYING CHANGES IN THE REGISTRATION?
Yes. You must notify changes in VAT Registration in FORM VAT 112.
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WHAT DETAILS ARE REQUIRED TO BE NOTIFIED?
- The changes which are required to be notified include: -
- A change in the name, address, or place of business defined on the certificate or notification.
- Any temporary closure or dis-continuation of the business
- Any change in business activities or in the nature of the sales being made or principal commodities traded.
- Any changes in the constitution of the firm.
- A change in bank account details
- If you commence to execute works contracts for State Government department or local authorities
- If you cease to execute such contracts.
- If there are other changes in your business or your business activities you should notify the tax office.
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WHAT WILL HAPPEN AS A RESULT OF THE NOTIFICATION OF THESE CHANGES?
You will receive a response from the tax office and your VAT Certificate of Registration or TOT notification of Registration will be amended or a new certificate issued if appropriate.
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WHY IS IT NECESSARY TO NOTIFY THESE CHANGES?
All your VAT accounting responsibilities under the VAT Act 2005 depend upon you having an accurate VAT Certificate of Registration. For example if the tax invoices you issue to your customer do not reflect the changed circumstance he will not be able to claim credit for the VAT he has been charged. In that case he may not wish to continue to conduct business with you.
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ARE THERE PENALTIES IN THE VAT ACT 2005 FOR THE FAILURE TO NOTIFY CHANGES?
Yes. There are penalties provided for the failure to maintain accurate records in the APVAT Act 2005.
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WHEN MUST I CANCEL MY REGISTRATION?
You must cancel your registration if:
a
You close down or sell your business. If you have more than one business and you are selling some of them to other persons, you can cancel your registration if the taxable turnover of your remaining business is below the threshold limits.
b
You cease to make taxable sale of goods as part of a business activity.
c
Your legal status changes, for example:
You are a sole proprietor and form a partnership;
You dissolve a partnership and run the business as a sole proprietor;
Your sole proprietorship or partnership is replaced by an incorporated company;
Your company is wound up and replaced by a partnership or a sole proprietorship.
You stop making taxable sales for any other reason. (e.g. If a VAT registered sole proprietor dies, his executors have the responsibility of cancelling his registration).
In any of the above cases, you must inform the Commercial Taxes Department within 14 days, of the date of the change. An application for cancellation of registration can be obtained from the local Tax Office.
Failure to apply for cancellation of the VAT registration at the proper time may cause you to be liable to a penalty. If you are unsure about your legal responsibility to cancel your registration, you should consult your local Tax Office for advice.
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CAN MY VAT REGISTRATION BE CANCELLED BY THE COMMERCIAL TAXES DEPARTMENT?
Yes. The Commercial Taxes Department can cancel the VAT registration of any person who is considered not required or entitled to be registered for VAT .
In addition, the Commercial Taxes Department can cancel the registration of a person who has voluntarily registered for VAT where that person:
a
Has no fixed place of abode or business;
b
Does not keep proper accounting records;
c
Has not submitted correct and complete tax returns.
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WHEN CAN I ASK TO HAVE MY REGISTRATION CANCELLED?
You can ask for cancellation if:
You can satisfy the Commercial Taxes Department that:
The value of your taxable turnover exclusive of VAT for the previous 3 calendar months did not exceed Rs.10 lakhs; AND
The value of your taxable turnover exclusive of VAT for the previous 12 calendar months did not exceed Rs.30 lakhs.
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ARE THERE ANY DISADVANTAGES IN CANCELLING MY VAT REGISTRATION?
You will no longer be able to reclaim the VAT paid on your taxable purchases. In addition, you will be required to pay back input tax credit availed in respect of goods on hand on the date of cancellation.
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WHAT IF I HAVE A CREDIT BALANCE AT THE TIME OF CANCELLATION OF REGISTRATION?
If you have tax credit at the time of cancellation, the same will be refunded to you within 90 days of making the claim.
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WHAT SHOULD I DO TO OBTAIN FURTHER INFORMATION?
You should contact your local Tax Office.
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WHAT ACTION DO I NEED TO TAKE CONCERNING VAT, IF I TRANSFER THE WNERSHIP OF MY BUSINESS?
First you have to decide if you are transferring the business as a going concern. In other words, the business is to continue to trade under a new ownership. If it is to continue as a business, then subject to certain conditions, the transfer of the business is exempt.
If the business is to cease although the ownership is to change, or the conditions to qualify for exempt treatment are not met, you must follow the full cancellation procedures and account for VAT on the stock and assets on hand on which you have received a credit for input tax.
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WHAT ARE THE CONDITIONS TO QUALIFY FOR EXEMPT TREATMENT?
a The business must continue trading under a new ownership.
b The purchaser or new owner of the business must be registered as a VAT dealer at the time the business is acquired.
c The VAT dealer transferring the business must notify the Tax Office of the transfer of the business within 10 days of the date of the transfer.
d The VAT dealer transferring the business must seek cancellation of his registration, if he has no other business activities, and comply with all the requirements of the provisions for the cancellation of the VAT registration.
e The new owner of the business who is a VAT dealer must obtain all the business records related to the transfer of the business and retain them for 6 years.
f The new owner must account for VAT on all stock and assets acquired on the transfer of a business when a taxable sale is made.
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WHAT HAPPENS IF I AM CHANGING THE LEGAL STATUS OF MY BUSINESS?
If you are changing your business, say, from a sole proprietorship to a partnership, a sole proprietorship to a corporation, a partnership to a corporation, etc., you must cancel your existing registration and register the new legal entity.
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WHAT HAPPENS IF I SELL ASSETS OF THE BUSINESS SEPARATELY?
You must charge VAT on these sales and account for the VAT in your final tax return.
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WHAT EFFECT DOES THE EXEMPT SALE OF A BUSINESS HAVE ON MY CALCULATIONS FOR CLAIMING INPUT TAX CREDIT?
None. If you have to calculate the amount of input tax credit that you can claim you can disregard the value of the exempt sale of a business.
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WHAT ARE THE RATES OF VAT?
There are three main rates of taxes per APVAT Act. The rates are 1%, 4%, (lower rates) and a standard rate of 12.5%. There are Special rates on Liquor, Petrol and Diesel.
To know more details Pl click on Tax rates
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HOW DO I KNOW THE RATE OF TAX ON THE GOODS I SELL?
Classification of goods and the rates of tax are listed in the Schedules to the APVAT Act 2005. A VAT dealer can find in these schedules, the rate (s) of tax applicable to the goods sold.
Pl refer to the schedules to know the rate of tax on any particular item.
All goods not listed in Schedule I, III, IV & VI of the VAT Act 2005, are liable to tax at the standard rate(12.5%).
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WHAT ARE SPECIAL RATES UNDER APVAT ACT 2005?
Special rate of tax will be levied on a few commodities listed in Schedule VI to the APVAT Act 2005.
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WHAT ARE THE GOODS LIABLE TO TAX AT SPECIAL RATES AND RATE APPLICABLE ON SUCH GOODS ?
Following are goods and their rates of taxes:
1. Liquors
2. Petrol other than aviation motor sprit
3. Aviation motor sprit
4. Aviation Turbine Fuel
5. Diesel
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CAN I CLAIM INPUT TAX CREDIT FOR THE TAX PAID ON MY PURCHASES OF SPECIAL RATE GOODS?
No. You are not eligible to claim input tax credit of tax paid on purchase of special rate goods.
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WHO IS LIABLE TO PAY TAX AT SPECIAL RATES?
The first seller of these goods in Andhra Pradesh is liable to pay. The second seller of these goods is not liable to charge and pay tax on his sales.
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AM I ENTITLED TO CLAIM INPUT TAX CREDIT ( on other purchases)IF I PAY TAX ON SALE OF THESE GOODS?
Yes. You are entitled to claim input tax credit on all your purchases except the items specified in Schedule VI and items in the negative list.
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HOW DO I COMPLETE MY VAT RETURN (VAT 200) IF I AM THE FIRST SELLER OF THESE GOODS ?
You must enter the sale value of these goods in box 18(A) and the tax charged and payable in box 18(B) of VAT return. You have to enter the purchase value of these goods in Box 10(A) of VAT return. In case of purchase of other goods they should go in the respective boxes according to the tax rate(s).
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IF I AM A SECOND / SUBSEQUENT SELLER OF THESE GOODS, HOW DO I COMPLETE MY VAT RETURN ?
In this case you must enter the total value of your purchases of these goods in box 10(A) of VAT 200. However you cannot enter the tax charged on these goods by your supplier in box 10(B).
In case of your sales of these goods you must enter the value of sales in box 18(A) of VAT 200. As you cannot charge any tax on sales of these goods you cannot enter tax in box 18(B) of VAT 200.
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IF I AM A DISTILLERY / BREWERY MANUFACTURING AND OR SELLING LIQUOR WHAT IS MY TAX LIABILITY ?
Your sale to APBCL and Canteen Stores Department is exempted. Hence you cannot charge any tax on your sales.
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IF I AM A DISTILLERY / BREWERY MANUFACTURING AND OR SELLING LIQUOR, CAN I CLAIM INPUT TAX CREDIT ?
No. You are not entitled to claim input tax credit on the sales made to APBCL. However, you can claim input tax credit for any inter state sales / exports of liquor.
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WHAT IF I AM A PETROLEUM COMPANY AND MAKE FIRST SALE TO ANOTHER PETROLEUM COMPANY IN ANDHRA PRADESH?
In this case your sale shall not be deemed to be first sale in the State and you are not liable to pay any tax. Such sales are specified under Schedule VI to APVAT Act 2005.
You are eligible for input tax credit on your purchases except for the items specified in the negative list and Schedule VI goods.
The value of the ineligible purchases shall be entered in Box 6(A) of the VAT return. All eligible purchases shall be entered in the respective boxes, according to the tax rates.
In respect of your sales you must enter the value in box 18(A) of VAT return. Since you have not charged any VAT you cannot enter the tax in box 18(B) of VAT return.
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WHAT IF I AM SELLING THESE GOODS AND OTHER GOODS ALSO?
In case you are second or subsequent seller of these goods and also other goods you are eligible to claim input tax credit only on other goods traded in.
You are eligible to claim input tax credit on your purchases on all items except the tax paid on these goods (say petrol, diesel etc.,) and the tax paid on the items in negative list.
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ARE THERE ANY PROVISIONS IMPOSING TAX ON PURCHASE IN AP VAT ACT 2005?
Yes. In certain exceptional circumstances, tax on the purchase value of goods is levied.
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WHAT ARE THOSE CIRCUMSTANCES?
A VAT dealer purchasing taxable goods from a non-VAT dealer and uses such goods:
a) as input for exempt goods;
b) as input for taxable goods and disposes off otherwise than by way of sale;
c) as inputs for goods sent outside the State by way of branch transfer or consignment sales.
Purchase tax is also levied if the goods liable to tax under AP VAT Act 2005 are disposed off without being consumed or without resulting in a taxable sale either within the State or in the Inter-State trade.
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WHAT IS THE RATE OF PURCHASE TAX?
The rate applicable to such goods is 4% except for the goods mentioned in Schedule III of the Act, where the rate applicable is 1%.
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HOW DO I DECLARE AND PAY TAX ON SUCH TRANSACTIONS?
The purchase value should be declared in the Box 6(A) of VAT return in the tax period pertaining to purchases. The liability to pay tax on such purchases arises only in the circumstances mentioned in Question 2 of this leaflet and the value of goods liable for tax in that tax period alone shall be entered in Box 15(A) of VAT return. The tax due on such value shall be entered in Box 15(B).
For instance, if you have purchased taxable goods worth Rs.1,00,000 from a non- VAT dealer in the month of October, you are required to show the value in Box 6(A) of the VAT return for October. If the goods have been put to use in the month of December in the manner explained in Question 2, the value of such goods, say Rs.50,000/-, shall be entered in Box 15(A) of VAT return for the month of December.
The tax due on it shall be disclosed in the Box 15(B) of the VAT return.
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WHAT ARE THE PROVISIONS IN THE APVAT ACT, 2005 FOR THE TREATMENT OF FARMERS?
Farmers are not regarded as in business if they are selling their own agricultural produce and they are outside the scope of VAT. However, if they process them into some other form and sell, they are liable to tax if their turnover is above the threshold limits, e.g. conversion of paddy to rice, sugarcane to jaggery, oilseeds to vegetable oil and consequently, their sales.
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IS THERE ANY EXEMPTION AVAILABLE TO FARM PRODUCE?
Yes. They are listed in Schedule-I of APVAT Act 2005( Pl see list of exempt goods.
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WHO IS LIABLE TO PAY TAX ON FARM PRODUCE THAT IS NOT EXEMPTED FROM TAX UNDER THE APVAT ACT, 2005?
Persons other than farmers who are in the business of buying or selling such produce whether processed or unprocessed are liable to pay tax under the APVAT Act, 2005 provided their turnovers are above threshold limits.
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IF I AM LIABLE TO PAY TAX HOW DO I DISCHARGE MY LIABILITY TO TAX UNDER THE APVAT ACT, 2005?
If the value of the goods you sell in the State of Andhra Pradesh exceeds Rs.40 lakhs in any period of 12 consecutive months or exceeds Rs.10 lakhs in any period of 3 consecutive months, you must register for VAT.
If the value of the goods you sell exceeds Rs.5 lakhs in any period of 12 consecutive months, you must register for Turnover Tax.
If you make inter-State sales, transactions of transfers or consignment sales outside the State under the Central Sales Tax Act, 1956, you must register for VAT and pay VAT at the rate specified in the APVAT Act, 2005.
If you are registered for Turnover Tax, you must account for Turnover Tax at the appropriate rate.
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AM I LIABLE TO PAY TAX UNDER THE APVAT ACT 2005 IF I BUY AGRICULTURAL PRODUCE AND SEND THEM OUTSIDE THE STATE WITHOUT MAKING A SALE?
In such a situation, you are liable to pay tax at 4% on the purchase value of the agricultural goods Purchased from persons not registered as VAT dealers.
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DO I HAVE TO PAY VAT IF I AM ACTING AS A SELLING AGENT FOR A RESIDENT PRINCIPAL IN ANDHRA PRADESH?
No. Your principal has to pay VAT on the transaction and he should authorize you to issue a tax invoice on his behalf. He must account for VAT on the transaction and only he can take credit for any input tax for the purchases of taxable goods in A.P. from VAT.
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WHAT ARE MY RESPONSIBILITIES IF I AM A BUYING AGENT ON BEHALF OF A RESIDENT PRINCIPAL?
The invoice/tax invoice you obtain from the seller must be made out in the name of your principal. In the case of a tax invoice, the principal’s TIN must be shown on the tax invoice.
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WHAT IS INPUT TAX?
Input tax is the VAT charged by your supplier on your business purchases in the State of Andhra Pradesh. It includes the VAT on goods purchased for resale, raw materials, consumables, packing materials, capital goods and general office equipment. It excludes taxes paid other than VAT on purchases from dealers not registered for VAT or on purchases from outside the state or outside the country.
It does not include VAT paid on goods not meant for business. VAT charged in these circumstances is not your input tax.
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ARE THERE ANY BUSINESS PURCHASES ON WHICH INPUT TAX CANNOT BE CLAIMED?
The purchases on which you cannot claim a credit for your input tax are DEFINED AS PER Rule20 (2) of APVAT Act:
a All automobiles including commercial vehicles/two wheelers/three wheelers required to be registered under the Motor Vehicles Act 1988 and including spare parts for the repair and maintenance thereof; unless you are in the business of dealing in these goods.
b Fuels used for automobiles or used for captive power generation or used for power plants.
c Air conditioning units other than used in plant and laboratory, restaurants or eating establishments, unless you are in the business of dealing in these goods.
d Any goods purchased and used for personal consumption.
e Any goods purchased and provided free of charge as gifts otherwise than by way of business practice.
f Any goods purchased and accounted for in the business but utilized for the purpose of providing facilities to employees including any residential accommodation.
g Crude oil used for conversion / refining into petroleum products.
h Natural gas and coal used for power generation.
i Any input used in construction or maintenance of any buildings including factory or office buildings, unless you are in the business of executing works contracts.
j Earth moving equipment such as bulldozers, JCB’s and poclain etc., and parts and accessories thereof, unless you are in the business of dealing in these goods.
k Generators and Parts and accessories thereof used for captive generation unless you are in the business of dealing in these goods.
The above list of goods is generally called ‘negative list’.
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CAN I ALWAYS CLAIM A CREDIT FOR INPUT TAX?
When you purchase goods and have to pay VAT, ask yourself 'is this purchase wholly for my taxable business activities'?
If it is for business activities and is not listed in the answer to Question 2 above, you will be able to claim a credit for the VAT you have paid, which is your input tax credit.
You must possess an original tax invoice to claim a credit for input tax.
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WHAT PROOF DO I NEED TO CLAIM A CREDIT FOR INPUT TAX?
You must have an original tax invoice to substantiate a claim for input tax credit.
Without this document you will be unable to claim a credit.
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HOW DO I CLAIM MY INPUT TAX CREDIT?
When you complete your VAT return each month the amounts you enter in Boxes (7B), (8B), and (9B) is your claim for credit of input tax on purchases of goods at the tax rates of 4%, 12.5% and 1% respectively.
If the input tax exceeds the output tax in a tax period i.e. total in Box (11) exceeds the amount in Box (20) of the VAT return, you can claim credit for the excess in Box (24). You also have the option of adjusting this credit towards CST tax due if any for that tax period in Box 24(a). The balance credit will be carried forward to the next VAT return.
If you have any international exports in this tax period, you can claim refund of excess credit in Box (23) of VAT return.
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CAN I CORRECT MYSELF IF WRONG CREDIT IS CLAIMED IN A PARTICULAR TAX PERIOD?
Yes. If the VAT return filed does not contain correct amount of input tax credit, an application on Form VAT 213 shall be submitted to the tax officer within a period of six months from the end of the relevant tax period.
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HOW DO I CALCULATE THE AMOUNT OF INPUT TAX WHICH I CAN CLAIM AS A CREDIT IF I MAKE BRANCH TRANSFERS AND CONSIGNMENT SALES AND USING COMMON INPUTS?
Where a VAT dealer is making taxable sales and exempt transactions in a tax period and inputs are common for both, the amount which can be claimed as input tax credit for the purchases of the goods at the tax rate of 4% shall be calculated by the formula
B
A x ---
C
Where
A is the total amount of input tax for the tax rate of 4% for the tax period, excluding the tax paid on the purchase of negative list goods on which input tax cannot be claimed
B is the value of taxable sales for the tax period and which shall include value of international exports and value of inter-state sales of taxable goods (B is the sum total of Boxes 13 A, 14 A, 16 A, 17 A and 19 A on your VAT return);
C
is the total sale turnover, which includes value of branch transfers and consignment sales (C is the sum total of Boxes 12 A, 13 A, 14 A, 16 A, 17 A and 19 A on your VAT return).
The result of this calculation is the amount of input tax that can be claimed in Box (7B) of your VAT return. The value related to the tax claimed must be entered in Box (7A) of the VAT return and the balance of the value including the unclaimed input tax entered in box (6A) of the VAT return.
For tax rate of 12.5% paid on inputs, the tax amounting to 8.5% portion is given as input tax credit in total and for the remaining 4% portion the formula mentioned above shall be applied. The total of these calculations is the amount of input tax that can be claimed in Box (8B) of your VAT return. The value related to the tax claimed must be entered in Box (8A) of the VAT return and the balance of the value including the unclaimed input tax entered in Box (6A) of the VAT return.
Note: If you are dealing in Gold & Jewellery, for tax rate of 1% paid on inputs, the formula mentioned above for tax rate of 4% shall be adopted and the result of this calculation can be claimed in Box (9A) of your VAT return.
The value related to the tax claimed must be entered in Box (9B) of the VAT return and the balance of the value including the unclaimed input tax entered in Box (6A).
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AM I REQUIRED TO MAKE ANY DECLARATIONS OR FILE ADDITIONAL ENCLOSURES ALONG WITH THE TAX RETURN?
You are required to file an annexure to monthly return in Form VAT 200A every tax period. In addition to the monthly annexure, you are required to file an annual return in Form VAT 200B. The excess input tax credit claimed shall be paid back or the balance input tax credit eligible can be claimed in the tax return for March.
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CAN I ADOPT A DIFFERENT METHOD TO CALCULATE INPUT TAX CREDIT?
If you are not having common inputs and are able to establish that specific inputs are meant for specific output, then you can adopt the following method to arrive at eligible input tax credit every tax period:
1 You can take credit for the full amount of input tax paid on inputs used separately for taxable goods. You need to keep with you evidence in the form of stock registers or other accounts for establishing the above.
2 For the common inputs, you can claim input tax credit by applying the formula Ax B/C for the common inputs used for taxable sale and stock transfers.
3
You are required to file an annexure to monthly return in Form VAT 200A every tax period. In addition to the monthly annexure, you are required to file an annual return in Form VAT 200B. The excess input credit claimed shall be paid back or the balance input credit eligible can be claimed in the tax return for March.
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WHAT IS THE AMOUNT OF INPUT TAX CREDIT THAT CAN BE CLAIMED BY ME IF I AM BUYING AND SELLING GOODS IN THE SAME FORM AND USE FEW COMMON INPUTS LIKE PACKING MATERIAL FOR SALES OF TAXABLE AND EXEMPT GOODS?
If you are buying and selling the goods in the same form, you can claim full input tax credit in respect of all taxable goods purchased in every tax period. The adjustment for the input tax credit pertaining to common inputs can be made in the year-end in the return for March.
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AM I REQUIRED TO MAKE ANY DECLARATIONS OR FILE ADDITIONAL ENCLOSURES ALONG WITH THE TAX RETURN AND HOW DO I MAKE ANNUAL ADJUSTMENT FOR THE COMMON INPUTS?
You are required to make a declaration in the Form VAT 200 D for every tax period along with tax return giving the break up of your turnovers and input taxes. For the common inputs, you shall repay input tax related to exempt element of common inputs after making adjustment in the tax return for March by filing Form VAT 200B for the period of twelve months ending March. In the Form VAT 200B, the eligible input tax credit shall be calculated by applying formula
A x B C
Where
A
is the total amount of input tax for common inputs for each tax rate excluding the tax paid on negative list goods
B is the sales turnover of taxable goods including zero-rated sales
C
is the “total turnover” including sales of exempt goods
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WHAT IS THE AMOUNT OF INPUT TAX CREDIT THAT CAN BE CLAIMED BY ME IF EXEMPT SALES ARE NEGLIGIBLE?
Where the value of taxable sales is 95% or more of the total value for that tax period, you can claim credit for the full amount of input tax paid on purchases excluding the tax paid on purchase of goods mentioned in negative list. You are not required to file any declaration every month but you should make annual adjustment by filing Form VAT 200 B in the month of March by following the calculation mentioned in answer to Question No.2.
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WHAT IS THE AMOUNT OF INPUT TAX CREDIT THAT CAN BE CLAIMED BY ME IF TAXABLE SALES ARE NEGLIGIBLE?
Where the value of sales of exempt goods is 95% or more of the total value for that tax period, you cannot claim credit for any input tax paid on purchases. You are not required to file any declaration every month but you should make annual adjustment by filing Form VAT 200 B in the month of March by following the calculation mentioned in answer to Question No.2.
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HOW DO I CALCULATE THE AMOUNT OF INPUT TAX WHICH I CAN CLAIM AS A CREDIT IF I AM A MANUFACTURER AND MAKE SALE OF TAXABLE GOODS AND SALE OF EXEMPT GOODS BY USING
COMMON INPUTS?
If you are a manufacturer and use common inputs for making taxable sales and exempt sales in a tax period, the amount, which can be claimed as input tax credit for the purchases of the goods at each tax rate shall be calculated by the formula
A x B
C
Where
A
is the amount of input tax relating to common inputs for each tax rate for the tax period; excluding the tax paid on negative list goods.
B
is the value of taxable sales for the tax period and which shall include value of international exports and value of inter-state sales of taxable goods – B is sum total of Boxes 13 A, 14 A, 16 A, 17 A and 19 A on your VAT return.
C
is the total sale turnover which includes exempt sales – C is sum total of Boxes 12 A, 13 A, 14 A, 16 A, 17 A and 19 A on your VAT return.
The result of this calculation is the amount of input tax that can be claimed in Box (7B) and (8B) of your VAT return for the tax rates of 4% and 12.5% respectively. The values related to the tax claimed must be entered in Box (7A) and, (8A) of the VAT return respectively and the balance of the value including the unclaimed input tax entered in box (6A) of the VAT return.
You are required to file an annexure to monthly tax return in Form VAT 200 A. In addition to the monthly annexure, you are required to make an annual adjustment in Form VAT 200B. The excess input credit claimed shall be paid back or the balance input credit eligible can be claimed in the tax return for March.
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CAN I ADOPT A DIFFERENT METHOD TO CALCULATE INPUT TAX CREDIT?
If you are able to establish that specific inputs which are meant for specific output, then
you can adopt the following method to arrive at eligible input tax credit every tax period:
1
You can take credit for the full amount of input tax paid on inputs used separately for taxable goods. You need to keep with you evidence in the form of stockregisters or other accounts for establishing the above.
2
For the common inputs, you can claim input tax credit by applying the formula Ax B/C for the common inputs used for taxable sale and exempt sales.
3
You are required to file an annexure to monthly return in Form VAT 200A every tax period. In addition to the monthly annexure, you are required to make an annual adjustment in Form VAT 200B. The excess input credit claimed shall be paid back or the balance input tax credit eligible can be claimed in the tax return for March.
4
Please note that once you adopt a particular method to calculate input tax credit, you need to be under that method upto the end of March. However, in case you wish to change the method of calculating input tax credit, you must intimate such option to your jurisdictional authority.
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HOW DO I CALCULATE THE AMOUNT OF INPUT TAX WHICH I CAN CLAIM AS A CREDIT IF I MAKE BRANCH TRANSFERS AND CONSIGNMENT SALES, SALE OF EXEMPT GOODS IN ADDITION TO TAXABLE SALES?
Where a VAT dealer is making taxable sales, exempt sales and branch transfers/consignment sales in a tax period, the amount which can be claimed as input tax credit for the purchases of the goods at tax rate of 4% shall be calculated by the formula
B
A x ———
C
Where
A
is the total amount of input tax for tax rate of 4% for the tax period; excluding thetax paid on the negative list goods (Refer Leaflet 04-A).
B
is the value of taxable sales for the tax period and which shall include value of international exports and value of inter-state sales of taxable goods-B is sum total of Boxes 13 A, 14 A, 16 A, 17 A and 19 A on your VAT return.
C
is the total sale turnover, which includes value of branch transfers and consignment sales–C is sum total of Boxes 12 A, 13 A, 14 A, 16 A, 17 A and 19 A on your VAT return.
The result of this calculation is the amount of input tax that can be claimed in Box (7B) of your VAT return. The value related to the tax claimed must be entered in Box (7A) of the VAT return and the balance of the value including the unclaimed input tax entered in box (6A) of the VAT return.
For tax rate of 12.5% paid on inputs, the tax amounting to 8.5% portion is given as input tax credit and for the remaining 4% portion; the formula mentioned above shall be applied. The total of these calculations is the amount of input tax that can be claimed in Box (8B) of your VAT return. The value related to the tax claimed must be entered in Box (8A) of the VAT return and the balance of the value including the unclaimed input tax entered in Box (6A) of the VAT return.
Note: If you are dealing in Gold & Jewellery, for tax rate of 1% paid on inputs, the formula mentioned above for tax rate of 4% shall be adopted and the result of this calculation can be claimed in Box (9A) of your VAT return. The value related to the tax claimed must be entered in Box (9B) of the VAT return and the balance of the value including the unclaimed input tax entered in Box (6A).
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AM I REQUIRED TO MAKE ANY DECLARATIONS OR FILE ADDITIONAL ENCLOSURES ALONG WITH THE TAX RETURN?
You are required to file an annexure to monthly return in Form VAT 200A every tax period. In addition to the monthly annexure, you are required to file an annual return in Form VAT 200B. The excess input credit claimed shall be paid back or the balance input credit eligible can be claimed in the tax return for March.
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CAN THE CT DEPARTMENT DIRECT ME TO ADOPT ONE OF THE ABOVE TWO METHODS?
The Deputy Commissioner of your division may impose any conditions or a particular method for apportionment of input tax credit.
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CAN I ALWAYS CLAIM CREDIT FOR MY INPUT TAX?
Normally, you are eligible to claim input tax credit on your purchases of:
raw materials;
Capital goods eg: machinery, equipment for use in the business;
packing material;
Tools and accessories used in the business; and
Goods for resale.
However, you cannot claim credit for VAT paid on goods not meant for business and those goods listed in the APVAT Rules 2005.
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WHAT ARE THE GOODS ON WHICH I CANNOT CLAIM AN INPUT TAX CREDIT?
You cannot claim an input tax credit for the following goods that are defined in list as per Rule 20 (2) of APVAT Act.
a
All automobiles including commercial vehicles / two wheelers / three wheelers required to be registered under the Motor Vehicles Act 1988 and including tyres and tubes, spare parts and accessories for the repair and maintenance thereof; unless you are in the business of dealing in these goods.
b
Fuels used for automobiles or used for captive power generation or used in power plants.
c
Air conditioning units other than those used in plant and laboratory, restaurants or eating establishments, unless you are in the business of dealing in these goods.
d
Any goods purchased and used for personal consumption.
e Any goods purchased and provided free of charge as gifts otherwise than by way of business practice.
f Any goods purchased and accounted for in the business but utilized for the purpose of providing facilities to employees including any residential accommodation.
g Crude oil used for conversion / refining into petroleum products.
h Natural Gas and coal used for power generation.
i Any inputs used in construction or maintenance of any buildings including factory or office buildings, unless you are in the business of executing works contracts.
j Earth moving equipment such as bulldozers, JCB’s and poclain etc., and spares and accessories thereof unless you are in the business of dealing in these goods.
k Generators and accessories thereof used for captive power generation unless you are in the business of dealing in these goods.
l Goods listed in Schedule VI to the Act.
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WHAT IS THE EFFECT ON MY INPUT TAX IF I MAKE TAXABLE AND EXEMPT SALES?
If you are making taxable and exempt sales you may only be entitled to claim a credit of input tax for the part related to taxable sales
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WHAT PROOF DO I NEED TO CLAIM INPUT TAX?
You must have an original tax invoice to substantiate a claim for input tax credit. If you do not possess such a document you must obtain one, otherwise you will not be eligible to claim a credit.
However, please note that you need not file these invoices to claim your ITC in the monthly return. You may retain all the original VAT invoices in you files
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HOW DO I CLAIM MY INPUT TAX CREDIT?
When you complete your VAT return each month you can claim an input tax credit on that return.
If the claim for input tax credit exceeds the amount of output tax on the return, you are entitled to a refund or to carry forward a credit. You will be able to claim a refund of excess input tax if you make international exports. You can also adjust excess credit against your Tax due under CST Act for the Tax period.
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WHAT RECORDS DO I NEED TO KEEP FOR VAT PURPOSE?
You must keep records of all sales and purchases of goods and a summary of VAT for each tax period covered by your VAT returns. This summary is called a "VAT Account'. If you are already in business, you will find that your normal business records can be adapted to give this information.
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WHAT ABOUT MY VAT RETURNS?
Every month, you must file a VAT return on Form VAT 200. The period covered by the return is called a Tax Period and will cover a calendar month.
You have to fill in details of the sales and purchases in that period and pay the total tax you owe to the Commercial Taxes Department or claim a refund or a credit.
Your VAT return and payment relating to a tax period must reach the Tax Office by the 20th day of the following month.
There are penalties for late filing of the return and for late payment or failure to pay the tax.
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IF I DO NOT HAVE TO REGISTER FOR VAT AND I CHOOSE NOT TO REGISTER WHAT ACTION DO I HAVE TO TAKE?
If you start a business, or have a business operating you must apply for registration as a TOT dealer at your local Tax Office, if your taxable turnover in the preceding 12 consecutive months exceeds Rs.5 lakhs or you expect it to exceed Rs.5 lakhs.
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1. HOW DO I ACCOUNT FOR VAT IF I AM A VAT DEALER MAKING SALES TO CONSUMERS ?
a) You cannot issue tax invoices to consumers since the law does not allow this.
(You must of course issue a VAT tax invoice to your buyers who are VAT dealers).
b) If you make sales to consumers, you must arrange to keep daily records of the value of your gross sales at each tax rate and exempt sales separately.
You need not separately record the VAT, but you must retain any cash register record or other record of sales made. (See VAT leaflet 01 "Value Added Tax Guide").
Examples of a tax invoice (Appendix-I), a commercial invoice (Appendix- II), purchases (Appendix-III) and sales records (Appendix-IV & V) that should be maintained are annexed to this leaflet.
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2. HOW DO I ACCOUNT FOR PURCHASES?
There are no prescribed registers for this purpose. You can maintain accounts as per normal accounting procedures. However, the details stated in Appendix-III must be recorded in your accounts.
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3. HOW DO I CLAIM CREDIT FOR THE VAT I HAVE BEEN CHARGED ON MY PURCHASES?
You can claim credit for input tax paid on your purchases on the basis of tax invoices you received for the taxable goods. You cannot claim input tax credit for purchases of goods specified in the negative list in the AP VAT Rules 2005.
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4. HOW DO I CALCULATE MY OUTPUT TAX (THE VAT ON MY SALES) WHEN I AM SELLING TO CONSUMERS WITHOUT SEPARATELY SHOWING THE VAT?
For sales of taxable goods you must total the gross receipts for the day at each tax rate. The amount of VAT included in the value of the sales of the goods can be calculated by applying the tax fraction to the gross receipt of the day at each tax rate. This will identify the amount of VAT included in the gross value of the sales you have made (See Appendix-V).
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5. WHAT IS THE TAX FRACTION AND HOW IS IT CALCULATED?
a) The tax fraction is a formula, which calculates the tax element where goods are sold at tax inclusive prices, i.e., where the VAT is not shown separately.
b) It is calculated by reference to the rate of VAT currently specified in the law. It is calculated from the formula :
R .
R+100
R is the tax rate.
For example with a rate of 4 percent the fraction is:
4 .= 4 = 1 .
4 + 100 104 26
If the rate were 12.5% percent, the fraction would be:
12.5 .= 12.5 = 1 .
12.5 +100 112.5 9|
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6. HOW DO I CALCULATE MY OUTPUT TAX (TAX DUE ON SALES) IF I SELL GOODS TO CONSUMERS AND VAT DEALERS?
If part of your sales are to VAT dealers use the sales account (Appendix -IV) to calculate the tax due from sales to VAT dealers. VAT due from sales to consumers / non-VAT dealers should be calculated from the gross receipts using the sales account (Appendix-V).Copies of all VAT invoices issued must be retained in date order.
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7. HOW DO I DECLARE THE VAT I HAVE TO PAY ON MY SALES ?
If your sales are only to consumers, calculate the tax due from the daily gross receipts (Appendix-V).
At the end of the month you total the columns in your sales accounts as follows; (Appendix-V).
The value of any exempt sales (Col .6 Appendix-V) goes in box 12(A) of the VAT return.
The value of your taxable sales @ 4% to consumers, exclusive of VAT (Col. 3C Appendix-V) goes in Box 16(A) of the VAT return and VAT on the above (Col.3B Appendix-V) goes in Box 16(B) of VAT return.
The value of your taxable sales at 12.5% (Col. 4C Appendix-V) goes in Box 17(A) of the VAT return and VAT thereon (Col.4B Appendix V) goes in Box 17B of the VAT return.
The value of your taxable sales at 1% ( Col.5C Appendix-V) goes in Box
19(A) of the VAT return and VAT thereon (Col.5B Appendix -V) goes in Box 19(B) of the VAT return.
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8. HOW DO I IDENTIFY GOODS WHICH ARE NOT LIABLE TO VAT OR GOODS TAXABLE AT DIFFERENT RATES ?
You must identify such goods from your purchase invoices and ensure that they can be probably accounted for at the appropriate VAT rate or exemption when the goods are sold. You can either provide a list of goods liable at different rates with a note of the appropriate rate at the cash point or colour code the goods to identify the VAT rate to the cashier or use the bar coding on your cash register machine, or use any other method you choose.
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Can you give me a detailed procedure for filling up of VAT 200 Return?
A Detailed Box wise guideline is prepared herewith for your help.
Guidelines for filling VAT 200
1 Insert the VAT TIN number, which you will find on your VAT Registration Certificate. Contact the Tax Office if you cannot locate this VAT TIN.
2
Insert the date, month and year for which the return is completed (e.g., 01.04.2005 to 30.04.2005)
3
You should insert the name and address shown on your Registration Certificate. Any changes must be notified in writing to the Tax Office.
4
Cross this box if you have made no sale or purchases or exempt transactions in the tax period. You then need not complete any other boxes except box 25 unless you have an entry in box 05. If you have an entry in box 05, either box 23 or 24 should be completed.
5 Enter the value of any credit carried forward from box 24 or 24(b) whichever is applicable from your previous tax return
6 Enter the value of purchases on which no VAT was charged or on which VAT was charged but no credit allowed. In this box, the following values should be included:
Exempt purchases i.e. purchases of exempt goods listed in Schedule I
The part of the value on which input tax cannot be claimed.
Imports from outside the territory of India
Purchases from outside the State. Include Receipts from Branches / HO which are situated outside the State.
Purchases from a person not registered for VAT or where you do not possess an original VAT tax invoice.
Do not enter value of purchases of negative list goods.
7
Enter the value excluding VAT of purchases on which you have paid VAT at the rate of 4% in box 7(A) and the VAT paid in box 7(B). This is only for purchases in Andhra Pradesh. If you are declaring sales of exempt goods or exempt transactions in box 12, you must limit the VAT credit being claimed. See VAT Leaflet 04 series. After restricting the input tax in case of sale of exempt goods or exempt transactions, the eligible input tax credit shall be entered in box 7 (B) and corresponding purchase value shall be entered in box 7 (A).
8
Enter the value excluding VAT of purchases on which you have paid VAT at the rate of 12.5% in box 8(A) and the VAT paid in box 8(B). This is only for purchases in Andhra Pradesh. If you are declaring exempt sales or exempt transactions in box 12, you must limit the VAT credit being claimed. See VAT Leaflet 04 series. After restricting the input tax in case of sale of exempt goods or exempt transactions, the eligible input tax credit shall be entered in box 8 (B) and corresponding purchase value shall be entered in box 8 (A). In case of branch transfers and consignment sales, to arrive at corresponding purchase value multiply input tax credit in box 8 (B) by 8 and enter in box 8 (A).
9
Enter the value of purchases at 1% VAT Rates. eg: 1% on Bullion and Jewellery. The value of purchases excluding VAT should be indicated in box 9(A) and the VAT paid in the box 9(B). If you are declaring exempt sales or exempt transactions in box 12, you must limit the VAT credit being claimed. See VAT Leaflet 04 series.
10
Enter the value of purchases liable at special rates i.e., Liquor, Petrol, Diesel and Aviation Motor Sprit or Aviation Turbine Fuel excluding tax in the box 10(A). This is only for purchases of goods in Andhra Pradesh. You cannot claim a credit for the Tax paid on your purchases.
Note for entries in 7B, 8B and 9B (Input Tax):
You cannot claim a tax credit for:
Tax at Special Rate, which you have paid.
Purchases from outside the state of Andhra Pradesh.
Purchases related to exempt sales.
Items listed in the notes to box 6(A).
(see VAT leaflet 04 series “What can I claim as credit of Input tax?”).
Enter the total amount of VAT that you are claiming as input tax on your purchases in Andhra Pradesh. If you have made no exempt sales and the entry in box 12 (A) is NIL you should enter all the VAT you have been charged for your business in the month except VAT on goods not eligible for input tax credit listed in notes to box 6(A).
If you have declared a value for exempt sales in box 12 (A) you will have to calculate the amount of input tax you can claim in boxes 7(B),8(B) and 9(B).
(See VAT Leaflet 04 “What can I claim as credit of Input Tax”)
11
Enter the total of boxes 5+7(B)+8(B)+9(B). This is your eligible input tax credit for the period.
12
Enter the value of exempt sales of goods as listed in Schedule I of the APVAT Act 2005 and exempted turnover. Include branch transfers and consignment sales made outside the State. You should not enter the value of high sea sales or sales in the course of import and transit sales in this box. The value of inter state sales of exempt goods should be included in this box. If you are a VAT dealer under composition, entire turnover under composition shall be entered in this box.
13
Enter the value of International exports made at zero rates during the period. You should also include sales in the course of exports (H-Form sales) in this box. Any sales made to a unit located in SEZ shall be entered in this box.
14
Enter the value of other Zero rate sales i.e. interstate sales. Do not include international exports, branch transfers and consignment sales outside the State.
15
Enter the purchase value of goods on which VAT is due in box 15(A) and the VAT due on such purchases in box 15(B). The goods liable to VAT on purchase value are goods purchased in Andhra Pradesh without payment of VAT and subsequently removed from the State on consignment/ branch transfer; used as inputs in production of exempt goods; used as inputs in production of finished goods which are sent on branch transfer/consignment sales outside the State of A.P. Please read the provisions of Section 4(4) of APVAT Act 2005
16
Enter the value of sales made at 4% excluding VAT in Box 16(A) and the amount of VAT charged at 4% in Box 16(B) during the period.
17
Enter the value of sales made at 12.5% excluding VAT in Box 17(A) and the amount of VAT charged at the standard rate in Box 17(B) during the period.
18
These shaded boxes are to be completed by the seller of the goods listed in Schedule VI of APVAT Act’2005 like liquor, diesel, petrol, and aviation turbine fuel. Enter the value of sales liable to tax at Special Rate (at first point of sale in the State) excluding tax in Box 18(A) and the amount of tax in Box 18(B) during the period. The dealers other than first sellers will not show any tax in Box 18 (B).
19
Enter the value of sales made at 1% rate excluding VAT in Box 19(A) and the amount of VAT charged in Box 19(B) during the period.
20
Enter the total of amount of Box 15(B)+16((B)+17(B) + 19(B) in Box 20. This is your output tax for the period. For the first seller of goods listed in Schedule – VI, the amount of output tax is the total of amount of box 15(B) + 16(B) + 17(B) + 18(B) + 19(B).
21
If Box 20 exceeds Box 11 enter the difference in Box 21. If Box 11 exceeds Box 20 enter NIL
22
Enter the number of the instrument like Challan / Cheque / Demand Draft etc., along with the date and the amount of tax paid. Also enter the Bank Name and the Branch Name along with the code on which the instrument was drawn. If you have any cash receipt with you, enter the details of such receipt & enclose the original with the return.
22
a(i) Where tax is deducted at source or tax is collected at source by the contractee; the details should be entered in this box. In the details column, you should mention the date and number of Form VAT 501/501A. You should also enclose Form VAT 501/501A with the return. See Leaflet 21 for more information on works contracts.
22
a(ii) Where you are in possession of an eligibility certificate for sales tax deferment, you should declare in this box, the part of the amount of tax declared in box 21 that is covered by this certificate. In the details column, you should mention the date and number of Form VAT 502. You should also enclose Form VAT 502 with the return.
22
a(iii) Where you have evidence of payment for entry tax, you should enter the amount of entry tax paid. In the details column, you should mention the date and number of the Form VAT 503. You should also enclose Form VAT 503 with the return.
22
a(iv) If you have received Form VAT 308 from the department in lieu of the excess input tax credit due to you, enter the details of such form. You should enclose Form VAT 308 to the return.
In case the amount of adjustment by way of TDS / TCS / Deferment / Entry Tax etc., is in excess of the tax declared, you enter the excess amount in Box 24.
23
If Box 11 exceeds Box 20 and you have declared exports in excess of Rs.10 lakhs in Box 13(A) and you are not adjusting the excess amount against a tax liability under the CST Act, enter the difference in Box 23 if you wish to claim a refund. This is the amount of tax, which you are claiming to be refunded if you have declared exports in excess of Rs.10 lakhs or you have carried forward a credit for a prescribed period. If Box 20 exceeds Box 11 enter ‘NIL’ in this box. If you have no entry in Box 13(A) less than Rs.10 lakhs or no credit carried forward for prescribed period, enter “NIL” in this Box.
Complete this box only if you wish to claim a refund.
24
If Box 11 exceeds Box 20 (or the payment and adjustment in boxes 22 and 22(a) put together exceed the tax due in box 21) and you have no entry in Box 13(A) less than Rs.10 lakhs and you do not wish to claim a refund, enter in box 24 the difference between Boxes 11 and 20 (or difference between the sum of payment and adjustment and tax due). This is the amount you are claiming as a credit to be carried forward for your next return. Enter “NIL” in Box 24 if Box 20 exceeds Box 11 or you have completed Box 23.
24a If you wish to adjust the credit carried forward in box 24 against the tax liability under the CST Act for the period; enter the amount of tax due under the CST Act which you wish to adjust.
24b Deduct the amount shown in the box 24(a) from the amount shown in box 24. This is the amount you are claiming as a net credit to be entered in box 05 of your return for the next tax period.
25
Write in the full name and status of the person making the declaration. Sign and Stamp and date the declaration. Enter the name of the person who is authorized to sign the VAT return. This same person must endorse this return with his or her signature and the date of signing the return. Please note that this box must be completed. The VAT return is a legal declaration and so care has to be exercised. In case of a sole proprietorship it is the sole trader who must sign the return. In the case of other legal bodies, it must be a authorized officer who must sign the VAT return.
FINALLY
Check that every box is completed.
REMEMBER YOU MUST INSERT NIL WHEREVER NECESSARY. DO NOT LEAVE ANY BOX BLANK.
Ensure you have signed and dated the return.
If you make a mistake cross out the figure and sign it with your initials and insert the correct figure;
REMEMBER
You must file the return at the Designated Centers by the 20th day of the month following the month for which the return has been completed, and any tax due paid by that date. You will be penalized and in addition incur an interest charge for failing to submit VAT return and pay the tax in time i.e. by the 20th day of the following month. Failure to file a NIL return by the 20th day of the following month will also incur a penalty.
Also Note
Filing a false declaration invites penalties.
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WHO CAN CLAIM REFUNDS OF VAT ?
The situations in which a refund can be claimed are:
a
VAT dealers making international exports in any tax period.
b
VAT dealers who have carried forward a credit for 24 months from the date of commencement of the Act.
c
VAT dealers who carry forward credit upto March every year provided they are in business for 12 months.
d VAT dealers cancelling their registration who have a credit balance at the time of Cancellation.
e Where refund arises as a result of decision of Appellate Authority or Court.
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WHAT ARE THE CONDITIONS RELATED TO REFUND CLAIMS ?
a
You must have filed all VAT returns due.
b
You must have paid all taxes declared as due on those returns.
c
You must have paid all outstanding arrears, penalties and interests under APGST Act '57, CST Act '56 and APVAT Act 2005.
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ARE THERE ANY SPECIAL CONDITIONS RELATED TO REFUND CLAIMS BY EXPORTERS?
Yes.
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WHAT OTHER CONDITIONS ARE THERE FOR REFUND CLAIMS NOT RELATED TO EXPORTS?
a
If you have a credit carried forward upto March and are in business for a period of 12 months a claim may be made for refund. However no refund claim can be made until March 2007 except by exporters.
b
If you are cancelling your registration and the cancellation has been approved by the tax department you will be sent a final return covering the outstanding period upto the date of cancellation. If you have completed that return to the satisfaction of the tax department and there is a credit balance you can claim this amount as a refund on that return.
c
Where an order of Appellate Authority / Tribunal / High Court is accepted and no further appeal/revision is made by the department, any refund arising out of such order shall be payable within 90 days from the date of the receipt of the order. However, you are required to produce accounts or records required by the Department within 7 days of issue of notice.
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HOW DO I MAKE A CLAIM FOR REFUND?
You can claim a refund on the VAT return itself by completing Box 23 except in the case of appellate orders. In this case the tax department will issue a Form within 15 days of receipt of the appellate order. You have to confirm the claim on the same Form within 15 days of receipt of the Form.
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HOW WILL A VAT REFUND BE MADE ?
The Tax Office will issue a refund advice together with a voucher for the amount due.
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CAN I OFFSET ANY REFUND I HAVE CLAIMED AND NOT RECEIVED IN A PREVIOUS TAX PERIOD AGAINST TAX DUE IN A LATER PERIOD?
No. Once you have made a claim for a refund you must await the receipt of refund. Any tax due on subsequent return shall be paid by the due date.
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IS IT TO MY BENEFIT TO ALWAYS CLAIM THE REFUND THAT I AM ENTITLED TO ?
Not always. If it appears by the 20th of the month when you file your return that you will be due to pay VAT or CST in the next return it will be to your benefit to carry forward the credit.
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WHAT SHOULD I DO TO OBTAIN FURTHER INFORMATION?
Contact your local Tax Office.
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ARE THERE ANY RESTRICTIONS ON RECLAIMING THE TAX I AM CHARGED?
Yes. You cannot reclaim VAT you are charged on:
a
All automobiles including commercial vehicles / two wheelers / three wheelers required to be registered under the Motor Vehicles Act 1988 and including spare parts for the repair and maintenance thereof; unless you are in the business of dealing in these goods;
b
Fuels used for automobiles or used for captive power generation or used in power plants;
c
Air conditioning units other than those used in plant and laboratory, restaurants or eating establishments, unless you are in the business of dealing in these goods;
d Any goods purchased and used for personal consumption;
e Any goods purchased and provided free of charge as gifts otherwise than by way of business practice;
f Any goods purchased and accounted for in the business but utilized for the purpose of providing facilities to employees including any residential accommodation;
g Crude oil used for conversion / refining into petroleum products;
h Natural Gas and coal used for power generation;
i Any inputs used in construction or maintenance of any buildings including factory or office buildings, unless you are in the business of executing works contracts;
j Earth moving equipment such as bulldozers, JCB's and poclain etc., and spares and accessories thereof unless you are in the business of dealing in these goods;
k Generators and accessories thereof used for captive generation unless you are in the business of dealing in these goods.
You can only provisionally claim a credit of input tax that is wholly attributable to your intended taxable sales. If your sales comprise exempt sales, you will be able to claim an input tax credit related to the level of taxable sales.
(See VAT leaflet 04 "What can I claim as a credit of input tax if I am making sale of exempt goods").
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I HAVE A TAX DEFERMENT, HOW WILL I BE AFFECTED UNDER VAT ?
a) You will be required to register for VAT.
b) You can issue tax invoices.
c) You can claim credit for VAT charged on your purchases.
d) The net tax ( output tax less input tax ) on your VAT return will be repayable from
the 15th year onwards.
e) Your net tax shown on the return will be debited to your eligibility amount.
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WHAT IF IN A GIVEN TAX PERIOD MY INPUT TAX EXCEEDS OUTPUT TAX ?
In this case you have to carry forward the credit declared on the return upto March 2007. The excess available, if any, in March 2007 return can be claimed as refund. Thereafter, refund can be claimed in March every year.
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WHAT IS THE POSITION IF I HAVE A TAX DEFERMENT AND MAKE EXPORT SALES WHERE THE INPUT TAX EXCEEDS THE OUTPUT TAX?
Even in this situation, you need to carry forward the excess input tax credit upto March of every year and claim refund.
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I CURRENTLY BENEFIT FROM A TAX HOLIDAY. HOW WILL I BE AFFECTED UNDER VAT ?
You will be required to register for VAT
You will be treated as converted into a Deferment Unit.
You will be eligible to issue tax invoice.
You will be eligible to claim input tax credit on your purchases. Conversely your purchaser can also claim input tax credit.
The unavailed period of tax holiday as on 01-04-2005 will be doubled and will be taken as eligibility period for deferment.
The unavailed balance as on 01-04-2005 will be the eligibility amount.
The repayment for each year's availment shall be made at the end of 14th year.
Example :-
XYZ is availing tax holiday for a period of 7 years from 1-1-2000 to 31-12-2006. The unavailed balance as on 01-04-2005 is Rs.120 Lakhs. The unit is treated as converted to deferment.The period of 1 year 9 months (21) months will be doubled and the unit can avail tax deferment upto 30-09-2008. The amount availed during 2005-06 shall be repaid on the 1st day of 15th year i.e., 1-4-2019.
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WHAT IF MY INPUT TAX EXCEEDS OUT PUT TAX OR IF I MAKE INTERNATIONAL EXPORTS ?
Refer to Question 2 & 3 above.
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WHAT HAPPENS TO THE TAX LIABILITY OF THE EARLIER YEARS WHICH ARISES AFTER 01-04-2005 ?
As and when any liability arises after 01-04-2005 under APGST or CST Act for the earlier periods, such tax demands shall be debited to your eligibility amount.
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WHAT IF I AM ELIGIBLE FOR DEFERMENT FOR ONE PRODUCT AND NOT ELIGIBLE FOR ANOTHER PRODUCT?
In this case, you have to declare turnovers pertaining to sales of both eligible and ineligible products in the appropriate output boxes of Form VAT 200. The net tax due is worked out in a manner similar to any normal VAT dealer. But you have to fill in Form VAT 502, the particulars of tax deferred in respect of eligible product and accordingly fill box 22(a) in Form VAT 200. By doing so, you are paying tax only on output of ineligible product by adjusting the tax due on eligible product towards deferment.
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WHAT RECORDS ARE REQUIRED TO BE MAINTAINED BY ME ?
You are required to maintain normal books of accounts. However, if you are availing incentive over & above base production or having both eligible & ineligible products, you may need to maintain separate records to determine the amount of tax eligible & ineligible for deferment.
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Is there any provision for a Taxpayer to dispute a decision made by the Commercial Taxes Department?
Yes. Sections 31-37 of the APVAT Act 2005 provide for taxpayers to appeal against a tax assessment or any decision made by the Commercial Taxes Department. If the taxpayer is not satisfied with the decision made by the officer not above the rank of Assistant Commissioner (CT) he can file an appeal with the Appellate Deputy Commissioner.
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WHAT ARE THE REQUIREMENTS TO FILE AN APPEAL BEFORE APPELLATE DEPUTY COMMISSIONER?
An appeal must be in writing in the prescribed Form in duplicate and shall contain:
Tax payers Identification number (TIN) or General Registration Number (GRN);
Details of assessment, decision or result which are the bases of the appeal.
Reasons for appeal.
Date and signature of the taxpayer and the signature of the tax payer's authorised representative (if any).
Proof of payment of required fee.
Proof of payment of tax admitted.
Proof of payment of 12.5% of disputed tax.
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ARE THERE ANY TIME LIMITS RELATED TO AN APPEAL?
Yes. You must file an appeal to the Appellate Deputy Commissioner within 30 days of receiving an assessment or decision from the authorities specified
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IF I AM DISSATISFIED WITH THE DECISION OF THE APPELLATE DEPUTY COMMISSIONER, WHAT FURTHER ACTION CAN I TAKE?
If you are dissatisfied with the decision of the Appellate Deputy Commissioner, you may, within 60 days of the date of the notification of that decision, file an appeal with the Appellate Tribunal. You must send to the Commercial Taxes Department a copy of appeal which you have filed with the Appellate Tribunal.
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IF I AM DISSATISFIED WITH THE DECISION OF THE APPELLATE TRIBUNAL, WHAT FURTHER ACTION CAN I TAKE?
If you are dissatisfied with the decision of the Appellate Tribunal, you may within 90 days appeal to the High Court against the decision.
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HOW CAN I APPEAL AGAINST A UNILATERAL ASSESSMENT?
If you fail to file a VAT / TOT return and receive a unilateral assessment made by the Commercial Taxes Department, you cannot appeal against that assessment. The only way to challenge this assessment is to file the VAT / TOT return as required by the AP VAT Act 2005.
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