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Sales tax +vat applicable?

Atul Kesarkodi (IPCC+Service) (71 Points)

21 August 2011

My Aunt is Trading in food products(buying and selling of food products like dry fruits, Farsaan and other eatables,without requiring further processing in Mumbai.Can any expert please advise whether she is liable to pay Sales Tax(as per Bombay Sales Tax Act(?) or any other Sales Tax law)? AND VAT both? And needs to be registered under both the Acts ?

1. If the person/company from whom she buys her food products ,is Already charging her VAT/Sales Tax in the bill

2. If the person/company from whom she buys food products ,is not charging any tax in the billing while selling to her, for re-sale.

Thanks in advance

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6 Replies

vaibhav (CA & CS) (577 Points)
Replied 22 August 2011

Hello Atul,

hope following points will resolve your queries:

1) If your aunt is trader ( of dry furuits ) in Mumbai than she is liable for Maharsatra VAT.

2) if the Annual Turnover of your Aunt doesnot exceeds 10 lakhs per annum than she is not liable for registration under VAT Act.

3) since VAT is applicable to her, Sales tax will not apply.

4) The dealer from which she is purchasing the product and the dealer is charging VAT than she cannot take the VAT credit unless and untill she is registered within the VAT Act ( for compulsory registration turnover should exceed 10 lakhs p.a.)

5) however suppose her turnover does not exceeds the limit of 10 lakhs tham she can optinally get registraiton with the VAT. In such a case she will be able to claim the VAT credit.

Regards,

Vaibhav Sisodiya

8080671477

Atul Kesarkodi (IPCC+Service) (71 Points)
Replied 22 August 2011

Originally posted by : vaibhav
	Hello Atul, hope following points will resolve your queries: 1) If your aunt is trader ( of dry furuits ) in Mumbai than she is liable for Maharsatra VAT. 2) if the Annual Turnover of your Aunt doesnot exceeds 10 lakhs per annum than she is not liable for registration under VAT Act. 3) since VAT is applicable to her, Sales tax will not apply. 4) The dealer from which she is purchasing the product and the dealer is charging VAT than she cannot take the VAT credit unless and untill she is registered within the VAT Act ( for compulsory registration turnover should exceed 10 lakhs p.a.) 5) however suppose her turnover does not exceeds the limit of 10 lakhs tham she can optinally get registraiton with the VAT. In such a case she will be able to claim the VAT credit. Regards, Vaibhav Sisodiya 8080671477

Thanks for the reply, Sir. If you can explain a bit more, i ll be thankful...

I was a bit confused ,becoz one of my office friend told me to confirm whether she be liable to collect and pay tax under the Bombay Sales Tax Act. and how can she be liable to tax under two different sales tax laws(BST ACT and M-VAT) for the same products she is re-selling for bill/cash memo raised by her, only once?

So..

1. she will not be be liable to tax under any other Sales tax law ? ,if she registers herself and collects+pays tax under Maharashtra VAT?(assuming her turnover >10lacs)

2. IF her turnover does not exceed 10lacs will she be liable under any other sales tax law(for registration and in billing to her customers)? Also, if turnover doesnot exceed 10lacs and she still registers under Maharashtra VAT voluntarily ,will she be required to file VAT returns?

Thanks sir

really appreciated.

vaibhav (CA & CS) (577 Points)
Replied 22 August 2011

1) if she registered under vat no sales tax is applicable. 2) if she voluntary get registered under vat she will have to file vat return. 3) if she does not get registered under vat than she cannot chage vat in her invoice at the time of making sale.

Savan Somani (Corporate Manager) (478 Points)
Replied 22 August 2011

If you are a dealer and your turnover exceeds the threshold, then you must register with the Sales Tax Department. The threshold is based on the total turnover of sales and the level of taxable sales or purchases in a year commencing 1 April. The threshold limit, above which you must register, depends on the nature of your business.

Your total turnover exceeds Rs 5,00,000 and your taxable sales or purchases exceed Rs.10,000 in a year commencing 1st April, you must register and account for tax. When should we apply for registration? We must apply within 30 days of becoming liable for registration that is when your turnover first exceeds the thresholds set out in this leaflet

On Food products like dry fruits, Farsaan and other eatables: MVAT Rate is 12.5%

1. If the person/company from whom she buys her food products ,is Already charging her VAT/Sales Tax in the bill - still you have to charge VAT & can take setoff

2. If the person/company from whom she buys food products ,is not charging any tax in the billing while selling to her, for re-sale - still you have to charge VAT & can take setoff

Regards,

SAVAN SOMANI

Atul Kesarkodi (IPCC+Service) (71 Points)
Replied 22 August 2011

Thanks for the reply sir, with regard to your explaination i have some doubts:

1.What is the difference between Total Turnover and Taxable sales(or purchases)? how to calculate the two in respect of the act? any links in this regard or specific info shall be greatly appreciated.

2. for the purposes of this Act, should BOTH the total turnover and taxable sales exceed the specified amounts? OR is it EITHER-OR ?