8/26/2010 1 ISSUES ON VAT AUDIT –KARNATAKA AND RECENT AMENDMENTS MADE. CA. Sanjay M Dhariwal KVAT AUDIT Total Turnover- Rs. 40 lakh for FY 2009-2010/60 lakh for 2010-2011 Form VAT 240- Amended Time limit of filing- 31 st December 2010 for Financial Year 2009-2010 File to LVO/VSO Jurisdiction where monthly returns are filed Auditor- Chartered Accountant, Cost Accountant, Tax practitioner
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
8/26/2010
1
ISSUES ON VAT AUDIT –KARNATAKA AND RECENT
AMENDMENTS MADE.
CA. Sanjay M Dhariwal
KVAT AUDIT
Total Turnover- Rs. 40 lakh for FY 2009-2010/60 lakh for 2010-2011
Form VAT 240- Amended
Time limit of filing- 31st December 2010 for Financial Year 2009-2010
File to LVO/VSO Jurisdiction where monthly returns are filed
Verification of correspondence with departments if any
Discussion with the dealer on any relevant compliance- Legal or procedural
8/26/2010
18
OTHER ISSUES
Areas to be looked into during Tax Audit with VAT Audit like
1) Freight charges for local sales/Interstate sales – Sharavathy Steel Products Private Limited Bangalore Vs state of Karnataka 2010(68) KLJ 206 (Tri)
2) Total Turnover/Taxable Turnover
3) Sale of fixed Asset/ Restricted capital goods
4) Cost/ ineligible tax credit
5) Non sale transactions (Goods on approval, Stock transfer, sample, gifts)
6) Payment of penalty/interest
7) Disallowed labour and like charges
OTHER ISSUES
8) Closing work in progress
9) Composition/Regular scheme
10) TDS for works contractor- IT/ VAT
11) Adjustment as prior period items/post period items
12) No provision of revision of IT Audit Report and VAT Audit Report
13) Detailed classification of goods for sales and purchases which may be local,
interstate with rate of tax in Trading account for KVAT Audit
8/26/2010
19
OTHER ISSUES
Reliance on Books of Accounts maintained electronically. Hard copies should be
obtained (consolidated) from the management after their conformations.
When Input tax credit is adjusted against the entry tax payable, verification of entry
tax compliance
Whether both the benefits of depreciation and input tax credit can be availed by the
dealer?
Verification of transactions with the sister concern companies
Centralized accounting
Statement/ Notices from the departments- observations by the Auditor
PROCEDURAL AMENDMENTS- KVAT RULES 2010
MRP Dealers- Rule 3(4)
A registered dealer selling Cigarettes, Gutkha, Cigars and other manufactured tobacco is
liable to pay tax on MRP if the consideration for sale exceeds rupees five hundred only. Total
turnover is aggregate of maximum retail prices of the goods sold (RULE 3(2) is not
applicable)
Taxable Turnover is total turnover less deductions
(d) Sales return
(h) Tax collected
(i) Turnover of agent
Form 105 in new form prescribed for dealer paying tax on MRP basis
The Invoice should disclose the MRP in addition to details specified in Rule 29
8/26/2010
20
PROCEDURAL AMENDMENTS- KVAT RULES 2010
Issue of TDAIN- Rule 9(3)
• Issue of registration certificate to specified persons under sub section 9-A(1)
• It requires Central Government, any state government or any other specified bodies
to deduct tax from the amounts payable by them to any works contractor.
• With regard to this now the commissioner can authorize any LVO or VAT sub-officer
to assign Tax Deduction Authority Identification Number (TDAIN)to Central
government, any State government or others specified in section 9-A.
PROCEDURAL AMENDMENTS- KVAT RULES 2010
Rule 15 (4) - Transfer of registration to legal heirs• Insertion of proviso to sub-section 1 of Section 27 w.e.f. 1-04-2009. The
prescribed authority may instead of cancelling the registration, may permittransfer of his certificate of registration to the legal heirs subject toapplication made by the legal heirs for transfer of registration.
• There was no rule prescribing the procedure for the above. Now the same isprescribed in Rule
• Any legal heir of a deceased individual dealer may apply for transfer ofregistration in Form VAT 1 along with the documents prescribed like deathcertificate, sworn affidavit etc. And after enquiry, the authority may permitsuch transfer.
8/26/2010
21
PROCEDURAL AMENDMENTS- KVAT RULES 2010Turnover changes (Rule 37- Tax period)Filing returns quarterly- For Regular dealer- Total turnover not exceeding twenty fivelakh earlier the limit was fifteen lakh.
Removal of Form 6The Annual Form VAT 6 (Amendment in registration details) which was to be filed alongwith the monthly return of last month of the financial year is not required to be filedwith effect from financial year 2010-2011.
Submission by Casual dealerWhen casual trader stops his occasional transactions during the course of a month,then he shall submit Form VAT 110 which has replaced Form VAT 100.
Keeping of Accounts (Rule 33(3)(b)The substituted Rule prescribes to maintain VAT Account by regular dealer with detailsof input tax, Output tax, debit notes and credit notes issued during the tax periodThe earlier requirement of entering the details in website is now removed.
PROCEDURAL AMENDMENTS- KVAT RULES 2010
Change in Registration detailsFor changes in registration certificate, the application shall be made in Form VAT 1 whichhas replaced VAT 2
Rule 50 – Mode of payment - Proviso InsertedThe proviso states that for specified classes of dealers as notified by the commissioner,the tax shall be paid through electronic remittance through internet.
Rule 153(4) – Petitions, appeals and applications for review to High CourtAppeal to High court, against any order passed by Advance Ruling authority shall be madein Form VAT 486.
8/26/2010
22
PROCEDURAL AMENDMENTS- KVAT RULES 2010
Rule 38 – Submission of monthly returns
The details to be entered in commercial tax website with respect to Local Registered Dealer purchase for which input tax credit was availed has been removed from the Rules. Therefore the following documents shall be accompanied with the returns –•Statement of local RD eligible purchase•Local sales made to other registered dealers•TDS certificates when the credit for TDS has to be claimed.
The Monthly returns may be filed through website by using the dept allotted usernameand password. The payment details have to be given along with return. Along withAcknowledgement number return and Cheque the return can be filed with department ifthe e payment is not made. Otherwise the E payment has to be made through notifiedbanks and return can be filed electronically
PROCEDURAL AMENDMENTS- KVAT RULES 2010
Rule 130-B – Claim of refund of tax (Inserted)
• The buying dealer, not liable to get registered under the Act can claim the refund of excess tax paid to selling dealer (MRP).
• The refund claim has to be made in Form VAT 166 to the local VAT jurisdiction of selling dealer.
• The refund payment order shall be made in Form VAT 255 within sixty days from the date of application.
Rule 159(3) - Inspection of goods
The owner or person – in - charge of a goods vehicle shall carry proof of entering thedetails in the website along with other details.
8/26/2010
23
PROCEDURAL AMENDMENTS- KVAT RULES 2010
Rules 164 & 165 – Clarification of rate of tax and Advance ruling
1. Definitions for the purpose of advance rulings with respect to clarification of rate of tax are given in rule 164.
2. Advance Ruling Application under section 60 to be made in Form VAT 540 along with a fee of Rs.1,000/-.
3. The authority, after examining the application, may either admit or reject it. But it shall not reject without giving an opportunity to the applicant to show cause against such rejection. If any rejection is made, then the authority shall mention the reason thereof.
4. The authority shall not admit the application when the issue raised is already pending before any authority, Tribunal or any court, or relates to a transaction or issue which is designed apparently for avoidance of tax.
5. The authority shall pass an order within three months of receipt of any application.
6. Other conditions prescribed for such clarification to be provided.