VAT or value added tax is imposed when the commodity is sold to the consumer. It is an prominent part of GDP of any country. VAT is a multi stage tax as it is imposed at every every stage of production of goods and services which are sold to the consumer. VAT is applicable on both local as well as imported products. A person who is earning more than 5 lakhs per annum from the supply of goods and services is liable to register for VAT payment.
In VAT the same kind of goods are taxed equally. For example a double door fridge from any company will be taxed same.
It reduces the chances of false compliance and tax evasion.
It made the taxation process transparent and easier as tax is levied at each stage of the production process.
VAT is helping India to participate in global trade practices as it is globally accepted taxation system.
VAT is a significant instrument for consolidating tax of the country which also helps in solving fiscal deficit issue to an extent.
Calculation:VAT can be easily calculated by deducting Input tax from output tax.
VAT= Output tax-Input tax
VAT enforcement comes under state governments, so different states have different rules and guidelines of implementation.
VAT is divided into four sub-heads:
NIL VAT rate:In some states the items which are sold by the unorganized sector in natural form get exempted from VAT such as salt,khadi.
1% VAT Rate: For items which are quite expensive, 1% VAT rate is applied at the price so that the VAT amount donat get high for such items.Mostly items such as gold,silver,precious stones fall under this VAT rate.
4-5% VAT : Daily consumptions goods like tea,coffee fall under this category.
General VAT rate: This rate applies to those goods which cant be put under any of the above three categories.For example goods like liquor,cigarettes are charged at a higher percent of 12.5% or 14 to 15%.
Both the taxes work differently as sales tax calculation is simple while VAT is multi stage form of tax and quite complicated.
Key differentiating points:
VAT is imposed on both producer as well as consumer of goods and services while sales tax is taken entirely from consumer.
VAT is multi stage process and imposed at every step of production while sales tax is levied from customer during final purchase of goods and services.
VAT is more transparent and well organized and hence generates more revenue for the government.
Collection of VAT increase burden on producers which is ultimately get charged from consumers.
VAT rates in Andhra Pradesh differs according to the product being traded, with different Schedules of the AP VAT Act containing different rates. The basic motive of the VAT Act is to ensure that basic commodities do not entice any VAT, thereby keeping the requirements of the local population in mind. Commodities like books, agricultural instruments, curd, maize, fruits and vegetables, meat and plantain leaves, etc. are exempted from VAT under Schedule I of the Act. There are around 100 items, mentioned under this Schedule.
Articles specified under Schedule III, IV and V are eligible for VAT, from 4% to 70% in some cases.
Time for filing of the GSTR-9 and GSTR-9A or the 2018-2019 annual Goods and Services Tax annual return, as well as the reconciliation statement, or the GSTR-9C, has been extended once more. This time, the extension is from October 31st to December 31st.
All business having an annual gross turnover below Rs. 5 billion shall now enjoy a 1-month soft-landing for their penalties according to the New India e-invoice regime as introduced this month.
Most GSTR returns of the months from February to May have been delayed till 30th June or in July.
E-way bills, as mandated for the movement of goods across state borders, has expiry dates extended to 30th June, 2020.
The 2028-2019 annual GST returns have been delayed once more. This time it is till 30th September, 2020.
The GST central council is reviewing a targeted help option for aiding industry sectors greatly affected by the pandemic. These sectors include hospitality, catering, cafes and restaurants, and airlines. Measures include a move to cash-based VAT payments and a relief on sales invoice.
The 2019-2020 Quarter 4 VAT returns has been delayed from 32st March to 30th June 2020. However, this is applicable to Delhi only.
According to the Central Board of Indirect Taxes and Customs, it shall be refunding all the Goods and Services tax and custom duty refunds immediately.
E-way bills, which are needed to report the GST on the movement of goods across states, shall no longer automatically expire in the lockdown period, from 20th March to 15th April.
The Central Ministry of Finance announces an extension for GST filing keeping in mind the worsening economic and industrial condition due to the pandemic.
The GSTRA-3B for companies and businesses with turnovers below Rs. 5 crore for the months of February, March and April is now extended at the end of June 2020. No penalty or interest shall be charged.
Taxpayers with turnovers more than Rs. 5 crore can delay the GST returns by the same deadline, but shall not need to pay an interest of 9% 15 days post the original deadline.
The deadline for filing GST annual tax returns for 2018-2019 is now extended till June 2020’s end.
Outstanding assessments or notices having deadlines shall now be pushed to June 30th, 2020.