Mvat Rate & Excise Duty
This query is : Resolved
21 March 2011
Dear Sir
Pls Advice me
NMK Textile is buying Cotton greige fabric from various Mills In India and getting it Dyed & Processed in Western India and South India. NMK is also buying processed / dyed fabric from Mills. The end use of these fabrics is Made Ups – (Bed Linen, Pillowcases, Duvet Covers etc). The dyed fabric is brought to NMK’s factory in Bhiwandi and it is cut, stitched and packed to be exported to other countries.
Now NMK wants to enter the domestic retail market and sell the following products under a Brand.
a) Mattresses
b) Pillows
c) Made Ups – Bed Linen, Duvet Cover, Quilts, Comforters etc made of Cotton and other material such as Silk, Polyster etc
d) Beds (with Electrical Motor)
NMK will either import these products from South Korea and China and / or will also manufacture these in India.
NMK is entering into a tie up with departmental store in Mumbai where these goods will be sold from that departmental store as a shop in shop concept. The address of the departmental store will be shown as additional place of business. Apart from this NMK also intends to open its own store in Mumbai.
Queries
1) Please advices under what Chapter will these products fall in VAT and what will be rate of VAT if it is not exempted?
2) If it is taxable will the company get to set off the VAT which is paid while importing? OR is there any other way to save the same?
3) Company wants to open stores in other cities also besides Mumbai - how will one plan the VAT liability if it imported in Mumbai and then send to various stores in India? Also will there be a separate registration required in each of these states?
4) What are the records/forms to be maintained?
a) When goods are sold within Maharashtra from either departmental stores or company’s own stores?
b) When goods are transferred and sold from other states?
Regards
Praveen
Pls Advice me
NMK Textile is buying Cotton greige fabric from various Mills In India and getting it Dyed & Processed in Western India and South India. NMK is also buying processed / dyed fabric from Mills. The end use of these fabrics is Made Ups – (Bed Linen, Pillowcases, Duvet Covers etc). The dyed fabric is brought to NMK’s factory in Bhiwandi and it is cut, stitched and packed to be exported to other countries.
Now NMK wants to enter the domestic retail market and sell the following products under a Brand.
a) Mattresses
b) Pillows
c) Made Ups – Bed Linen, Duvet Cover, Quilts, Comforters etc made of Cotton and other material such as Silk, Polyster etc
d) Beds (with Electrical Motor)
NMK will either import these products from South Korea and China and / or will also manufacture these in India.
NMK is entering into a tie up with departmental store in Mumbai where these goods will be sold from that departmental store as a shop in shop concept. The address of the departmental store will be shown as additional place of business. Apart from this NMK also intends to open its own store in Mumbai.
Queries
1) Please advices under what Chapter will these products fall in VAT and what will be rate of VAT if it is not exempted?
2) If it is taxable will the company get to set off the VAT which is paid while importing? OR is there any other way to save the same?
3) Company wants to open stores in other cities also besides Mumbai - how will one plan the VAT liability if it imported in Mumbai and then send to various stores in India? Also will there be a separate registration required in each of these states?
4) What are the records/forms to be maintained?
a) When goods are sold within Maharashtra from either departmental stores or company’s own stores?
b) When goods are transferred and sold from other states?
Regards
Praveen
14 April 2011
Dear sir,
Pls Advice me our company are decide a Remuneration & Professional Fees are given a Director.pls told me it is possible and yes pls give me sec.
regards
Pls Advice me our company are decide a Remuneration & Professional Fees are given a Director.pls told me it is possible and yes pls give me sec.
regards
03 August 2024
Here’s a comprehensive guide to address your queries regarding VAT and excise duty for NMK Textile's products and operations:
### **1. VAT Classification and Rates**
**a) Classification Under VAT:**
- **Mattresses, Pillows, and Made-Ups (Bed Linen, Duvet Covers, Quilts, Comforters, etc.):**
- **Chapter Classification:**
- **Mattresses and Pillows:** Generally fall under Chapter 94 (Furniture, Bedding, Mattresses, etc.) in the HS Code.
- **Made-Ups (Bed Linen, etc.):** Typically classified under Chapter 63 (Textiles, including bed linen) or Chapter 94, depending on the specific nature of the product.
- **VAT Rate:** In Maharashtra and most states, the VAT rate for such items is usually around 5% to 12.5%. You should check the latest VAT rate notifications for precise rates applicable to your products.
- **Beds with Electrical Motors:**
- **Chapter Classification:**
- **Beds (with Electrical Motor):** Likely falls under Chapter 94 (Furniture) or Chapter 85 (Electrical machinery).
- **VAT Rate:** This could range from 12.5% to 28%, depending on how the product is classified under local VAT laws.
### **2. VAT Set-Off and Savings**
**a) Set-Off on VAT Paid While Importing:**
- **VAT Set-Off:** Generally, you can claim input VAT credit for VAT paid on imports if the goods are used for taxable supplies. This credit is applied against the VAT payable on domestic sales.
- **Procedure:** Maintain detailed records and documentation of import transactions, including VAT payment receipts, bills of entry, and import invoices to claim the set-off.
**b) Other Ways to Save VAT:**
- **Duty Drawback:** For exported goods, you might be eligible for a duty drawback or refund of duties paid. Ensure you follow the required procedures for claiming such refunds.
### **3. VAT Liability and Registration for Multi-State Operations**
**a) Opening Stores in Other Cities:**
- **VAT Registration:** You will need separate VAT registration in each state where you open stores. Each state’s VAT authorities require businesses to register locally if they have a physical presence or make taxable supplies.
**b) Inter-State VAT Planning:**
- **Inter-State Transfers:** When goods are transferred between states, you need to comply with the respective VAT laws for inter-state movement. Typically, this involves issuing waybills and possibly paying VAT or CST on the transfer.
- **Documentation:** Maintain accurate records of all inter-state transactions, including transport documents and VAT/CST payment receipts.
### **4. Record Maintenance and Forms**
**a) Records for Sales Within Maharashtra:**
- **Sales Records:** Maintain sales invoices, sales registers, and VAT return forms. These should include details of sales transactions, VAT collected, and VAT payable.
- **Forms:** Ensure compliance with local VAT filing requirements by maintaining and filing periodic VAT returns.
**b) Records for Inter-State Transfers:**
- **Transfer Documentation:** Maintain records of transfer invoices, waybills, and any VAT or CST payment receipts. You should document all inter-state transactions meticulously.
- **VAT Returns:** File VAT returns as required for each state, including details of inter-state sales and purchases.
### **Remuneration and Professional Fees to Directors**
**a) Legal Basis for Remuneration:**
- **Remuneration to Directors:** It is permissible to pay remuneration and professional fees to directors. This is typically governed by the provisions of the Companies Act, 2013, and the company's Articles of Association.
- **Section Reference:** Under the Companies Act, 2013, Section 197 deals with the remuneration of directors. The payment must be within the limits prescribed by the Act and must be authorized by a resolution passed by the Board of Directors and/or shareholders, depending on the amount.
Ensure you consult with a tax advisor or legal professional to ensure compliance with all applicable laws and regulations for VAT and excise duty, as well as company law regarding director remuneration.
### **1. VAT Classification and Rates**
**a) Classification Under VAT:**
- **Mattresses, Pillows, and Made-Ups (Bed Linen, Duvet Covers, Quilts, Comforters, etc.):**
- **Chapter Classification:**
- **Mattresses and Pillows:** Generally fall under Chapter 94 (Furniture, Bedding, Mattresses, etc.) in the HS Code.
- **Made-Ups (Bed Linen, etc.):** Typically classified under Chapter 63 (Textiles, including bed linen) or Chapter 94, depending on the specific nature of the product.
- **VAT Rate:** In Maharashtra and most states, the VAT rate for such items is usually around 5% to 12.5%. You should check the latest VAT rate notifications for precise rates applicable to your products.
- **Beds with Electrical Motors:**
- **Chapter Classification:**
- **Beds (with Electrical Motor):** Likely falls under Chapter 94 (Furniture) or Chapter 85 (Electrical machinery).
- **VAT Rate:** This could range from 12.5% to 28%, depending on how the product is classified under local VAT laws.
### **2. VAT Set-Off and Savings**
**a) Set-Off on VAT Paid While Importing:**
- **VAT Set-Off:** Generally, you can claim input VAT credit for VAT paid on imports if the goods are used for taxable supplies. This credit is applied against the VAT payable on domestic sales.
- **Procedure:** Maintain detailed records and documentation of import transactions, including VAT payment receipts, bills of entry, and import invoices to claim the set-off.
**b) Other Ways to Save VAT:**
- **Duty Drawback:** For exported goods, you might be eligible for a duty drawback or refund of duties paid. Ensure you follow the required procedures for claiming such refunds.
### **3. VAT Liability and Registration for Multi-State Operations**
**a) Opening Stores in Other Cities:**
- **VAT Registration:** You will need separate VAT registration in each state where you open stores. Each state’s VAT authorities require businesses to register locally if they have a physical presence or make taxable supplies.
**b) Inter-State VAT Planning:**
- **Inter-State Transfers:** When goods are transferred between states, you need to comply with the respective VAT laws for inter-state movement. Typically, this involves issuing waybills and possibly paying VAT or CST on the transfer.
- **Documentation:** Maintain accurate records of all inter-state transactions, including transport documents and VAT/CST payment receipts.
### **4. Record Maintenance and Forms**
**a) Records for Sales Within Maharashtra:**
- **Sales Records:** Maintain sales invoices, sales registers, and VAT return forms. These should include details of sales transactions, VAT collected, and VAT payable.
- **Forms:** Ensure compliance with local VAT filing requirements by maintaining and filing periodic VAT returns.
**b) Records for Inter-State Transfers:**
- **Transfer Documentation:** Maintain records of transfer invoices, waybills, and any VAT or CST payment receipts. You should document all inter-state transactions meticulously.
- **VAT Returns:** File VAT returns as required for each state, including details of inter-state sales and purchases.
### **Remuneration and Professional Fees to Directors**
**a) Legal Basis for Remuneration:**
- **Remuneration to Directors:** It is permissible to pay remuneration and professional fees to directors. This is typically governed by the provisions of the Companies Act, 2013, and the company's Articles of Association.
- **Section Reference:** Under the Companies Act, 2013, Section 197 deals with the remuneration of directors. The payment must be within the limits prescribed by the Act and must be authorized by a resolution passed by the Board of Directors and/or shareholders, depending on the amount.
Ensure you consult with a tax advisor or legal professional to ensure compliance with all applicable laws and regulations for VAT and excise duty, as well as company law regarding director remuneration.
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