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Frequently Asked Questions

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GENERAL

Question What is VAT
Answer VAT is a simplified and transparent system of tax in which tax is levied on the value additions, at each stage in the production-distribution with provision of set-off of tax paid on earlier stage.
Question How VAT differs from Sales Tax?
Answer Sales tax is single and first point levy as against multiple point levy under VAT with set off of tax paid in State on purchases
Question How does VAT work?
Answer By providing set-off of the tax paid in the State at the time of purchases, tax cascading (tax on tax) is eliminated as such the prices of manufactured goods would go down.
Question What is input tax?
Answer "input tax" means tax paid or payable by a registered dealer in the course of business, on the purchase of any goods made from a registered dealer
Question What is output tax?
Answer "out put tax" means the tax charged or chargeable under this Act by a registered dealer in respect of the sale of goods in the course of his business
Question What is reverse tax?
Answer "reverse tax" means that part of the input tax for which credit has been availed in contravention of the provisions of section 18
18. Input Tax Credit.- (1) Input tax credit shall be allowed, to registered dealers, other than the dealers covered by sub-section (2) of section 3 or section 5, in respect of purchase of any taxable goods made within the State from a registered dealer to the extent and in such manner as may be prescribed, for the purpose of ?
(a) sale within the State of Rajasthan; or
(b) sale in the course of Inter-state trade and commerce; or
(c) sale in the course of export outside the territory of India;or
(d) being used as packing material of goods, other than exempted goods, for sale; or
(e) being used as raw material in the manufacture of goods other than exempted goods, for sale within the State or in the course of Inter-state trade or commerce; or
(f) being used as raw material in the manufacture of goods for sale in the course of export outside the territory of India; or
(g) being used in the State as capital goods;
however, if the goods purchased are used partly for the purposes specified in this sub-section and partly as otherwise, input tax credit shall be allowed proportionate to the extent they are used for the purposes specified in this sub-section.
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LIABILITY TO TAX

Question Who is liable to pay tax under the proposed VAT Act?
Answer - Manufacturer of goods having annual turnover exceeding rupees 2 lakhs ,
- Importer of goods (i.e. dealer who brings goods into the State), irrespective of turnover limit.
- Dealer having an annual turnover above rupees five lakhs
- Dealer registered under CST Act.
- Any person having occasional transactions in notified goods.
- Any person other than a casual trader and a registered dealer carrying on business temporarily for less than 120 days are liable to pay tax..
Question What is the VAT rate structure?
Answer The VAT Rates are: 1% - gold, silver, precious metals, gems & precious stones , 4% - essential goods & primary raw materials, 12.5% on goods not covered in any schedule & special category of goods taxable at specified rates
Question Is there any composition scheme for small dealers?
Answer Yes. Dealers (other than manufacturers and importers) whose turnover does not exceed rupees fifty laks and who purchases goods from a registered dealer of the State, may opt for payment of tax on its turnover at such rates, as may be notified by the State Govt.
Question Are there any goods, which are exempt from tax under VAT?
Answer Goods specified in the schedule-I of the Rajasthan VAT Act, 2003, are exempt from tax.
Question Is there any tax on purchase and sale of livestock under VAT regime?
Answer No. Live-stock are exempt from tax as per schedule I of the Rajasthan VAT Act, 2003.
Question Under what circumstances is purchase tax payable?
Answer Purchase tax is payable when a dealer purchases goods, other than exempt goods, in the circumstances where no tax is payable on their sale price and the dealer disposes off these goods for a purpose other than the following:
(a) sale within the State of Rajasthan; or
(b) sale in the course of Inter-state trade and commerce; or
(c) sale in the course of export outside the territory of India; or
(d) being used as packing material of goods, other than exempted goods, for sale; or
(e) being used as raw material in the manufacture of goods other than exempted goods, for sale within the State or in the course of Inter-state trade or commerce; or
(f) being used as raw material in the manufacture of goods for sale in the course of export outside the territory of India; or
(g) being used in the State as capital goods
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REGISTRATION

Question Who is required to be registered under the VAT Act?
Answer - Manufacturer of goods having annual turnover exceeding rupees 2 lakhs ,
- Importer of goods (i.e. dealer who brings goods into the State), irrespective of turnover limit.
- Dealer having an annual turnover above rupees five lakhs
- Dealer registered under CST Act.
Question Whether existing registered dealers would require fresh registration?
Answer No. Where a dealer was registered under the repealed Act he would be deemed to have been registered under this Act from the date of commencement of this Act, unless he otherwise opts for.
Question Is there a provision for voluntary registration?
Answer Yes. Dealers who intend to commence or who have commenced a business may apply for voluntary registration under section 12 of the Rajasthan VAT Act, 2003.
Question Is a person dealing in casual commodities as defined in clause (8) of section 2 of the Rajasthan VAT Act, 2003 is required to be registered ?
Answer A casual trader is a person who has occasional transactions of business nature whether as principal, agent or in any other capacity in respect of such goods as the government may notify. Such a person shall also be liable to pay tax at the applicable rate, irrespective of his turnover. However, it would not be necessary for such a person to get himself registered.
Question How can a dealer obtain registration?
Answer A dealer can obtain registration under VAT by making an application in Form VAT-01, along with the prescribed documents with the authority competent to grant registration having territorial jurisdiction over the principal place of business.
Question What information is required to be submitted along with the registration application?
Answer Information generally required to be submitted along with the registration application would include,-
(i) Declaration of business manager in Form VAT-02;
(ii) Copy, of partnership deed, if any, memorandum and articles of association of a company, constitution deed of trust, association of persons or body of individuals, certified by the applicant;
(iii) Copy of resolution passed by Board of Directors, in case of a company and of governing body, in case of other entities, for authorisation of a person to file the application for registration certified by the applicant;
(iv) Security required to be furnished as per section 15 of the Act in such form as prescribed in rule 78.
(v) Signed photo duly attested by a gazetted officer or notary public of following:-
a) Proprietor, in case of Proprietorship concern;
b) Every Partner, in case of Partnership firm;
c) Managing Director / Director or authorized signatory, in case of a Company;
d) Karta, in case of Hindu Undivided Family; and
e) Authorised Signatory, in all other cases.
(vi) Copy of voter identification card or passport or Permanent Account Number or driving license.
(vii) Copy of rent deed or rent receipt or electricity bill or telephone bill or water bill or own property documents, in support of address proof.
Question What is the time period within which a dealer is required to get himself registered?
Answer A dealer is required to get himself registered within 30 days from the day on which his turnover exceeds the limits laid down in section 3 of the Act or within 30 days of the date of commencement of the Raj. VAT Rules, 2006, whichever is later.
Question What happens if a person liable to register does not get himself registered?
Answer The Act provides penalty of a sum not exceeding rupees one thousand for dealers who fail to register within the prescribed time and in the prescribed manner.
Question What are the provisions relating to security to be filed at the time of registration?
Answer The Act requires to furnish security at the time of registration. A dealer would have to furnish initial security at the time of registration in form of surety of two dealers registered under the Act. If he is not able to furnish such surety, he would have to furnish the following security: he shall submit security in the form of National Saving Certificate or in cash or in the form of three years bank guarantee of a nationalized bank - Rs.10,000 in case of a small scale manufacturing unit, Rs. 15,000 for medium scale manufacturing unit and Rs. 25,000 for large scale manufacturing unit; and - Rs. 10,000 in cases that are not covered in the categories mentioned above For voluntary registrants, security requirement is for Rs 10,000 in the form of NSC, cash or three years bank guarantee.
Question When is additional security required to be furnished?
Answer Additional security is required to be furnished in such cases where the assessing authority has reason to believe that such increase in security is required keeping in view the amount of tax payable by the dealer.
Question Whether separate registration is required for additional places of business within the State?
Answer No separate registration is required for additional places of business within the State. However, a separate branch certificate under the existing registration number will be granted for each additional place of business within the State. The present system of additional registration will not continued in VAT system..
Question What will happen to the existing registrations for the additional places of business?
Answer Such dealer shall have to inform his assessing authority or authority competent to grant registration within 60 days from the commencement of the act. declaration of principal place of business, otherwise the Commissioner or any officer authorized by him for this purpose, shall declare one such registration to be the registration under this Act and shall issue branch certificate in lieu of remaining registration certificates.
Question Whether provision regarding provisional registration in case of intending manufacturer will continue?
Answer No such provision will exist under the new VAT Act.
Question In case of change in the Constitution of Business like status, name, place of business, etc at the time of registration, what action is required to be taken and when?
Answer In case of any change in the information submitted at the time of obtaining registration, an application in the prescribed from along with the necessary proof of such change is required to be filed with the jurisdictional authority competent to grant registration within 30 days of such change. On submission of such information the said authority shall amend the certificate of registration. However, when there is a change in the basic status of a dealer such as conversion of proprietary concern to partnership firm or vice-versa, dissolution of the firm, creation of a new firm, conversion of firm into company or vice-versa, a fresh certificate of registration has to be obtained.
Question In what circumstances will the certificate of registration be cancelled?
Answer The certificate of registration would be liable to be cancelled in the following circumstances:
- where any business in respect of which a certificate of registration has been granted to a dealer under this Act, is discontinued permanently;
- in the case of transfer of business by a dealer, the transferee already holds a certificate of registration under this Act; or
- a dealer has ceased to be required to be registered and to pay tax under this Act; or
- a dealer has obtained the certificate of registration by misrepresentation of facts or by fraud; or
- a dealer has obtained a certificate of registration against the provisions of this Act; or
- a dealer has failed to furnish security within the period specified and a period of ninety days has elapsed ; or
- in case of change of basic status of the dealer; or
- a dealer issues false or forged VAT invoices.
However, an opportunity of being heard shall be given to the dealer before such cancellation
Question Whether Commissioner has an authority to cancel registration?
Answer Yes. In interest of revenue, Commissioner can cancel the registration, after hearing the dealer.
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PAYMENT OF TAX AND FILING OF RETURNS

Question What is the net tax payable by a dealer?
Answer - The net tax payable by a dealer for a tax period shall be calculated as under:-
T = (O+R+P) – I
Where –
T is net tax payable;
O is amount of output tax ;
R is amount of reverse tax;
P is the amount of tax payable under sub-section (2) of section 4; and
I is the amount of input tax.
Illustratation: Purchase Price Input tax(@10%) Sale Value Output tax(@10%) Net Tax payable(Rs. 10000-7000)
Rs.70,000 Rs.7,000 Rs. 100,000 Rs. 10,000 Rs. 3,000
Question Under what circumstances will input tax credit be available under VAT?
Answer Input tax credit shall be allowed, to registered dealers, other than the dealers covered by sub-section (2) of section 3 or section 5, in respect of purchase of any taxable goods made within the State from a registered dealer to the extent and in such manner as may be prescribed, for the purpose of –
(a) sale within the State of Rajasthan; or
(b) sale in the course of Inter-state trade and commerce; or
(c) sale in the course of export outside the territory of India;or
(d) being used as packing material of goods, other than exempted goods, for sale; or
(e) being used as raw material in the manufacture of goods other than exempted goods, for sale within the State or in the course of Inter-state trade or commerce; or
(f) being used as raw material in the manufacture of goods for sale in the course of export outside the territory of India; or
(g) being used in the State as capital goods;
however, if the goods purchased are used partly for the purposes specified in this sub-section and partly as otherwise, input tax credit shall be allowed proportionate to the extent they are used for the purposes specified in this sub-section.
Question Under what circumstances will input tax credit not be available under VAT?
Answer No input tax credit shall be allowed on the purchases.
(i) from a registered dealer who is liable to pay tax under sub-section (2) of section 3 or who has opted to pay tax under section 5 of this Act; or
(ii) of goods made in the course of import from outside the State; or
(iii) where the original VAT invoice or duplicate copy thereof is not available with the claimant, or there is evidence that the same has not been issued by the selling registered dealer from whom the goods are purported to have been purchased; or
(iv) of goods where invoice does not show the amount of tax separately; or
(v) where the purchasing dealer fails to prove the genuineness of the purchase transaction by producing the selling dealer or otherwise, on being asked to do so by an officer not below the rank of Assistant Commercial Taxes Officer authorized by the Commissioner
Question Whether input tax credit is allowed on exempted sales?
Answer Input tax credit is allowed from the tax payable by the dealer. In case of exempted goods, there is no tax payable by him as such no input tax credit is allowed on exempted sales.
Question Whether credit of tax paid on purchase would be allowed as set off against inter-state sales?
Answer Yes, set off is available against the tax liability arising under CST Act
Question Whether input tax credit would be available as set off against branch transfers?
Answer Generally, no such set off shall be allowed. However, partial credit as may be notified shall be allowed in case of tax paid on purchases for branch transfer.
Question When would the input tax credit be available and what proof is required to claim input tax?
Answer Input tax credit can be claimed in the period in which the dealer receives the original VAT invoice. However, no credit would be available after 3 months from the date of such invoice. Moreover, in case where original VAT invoice is lost, input tax credit may be allowed on the basis of duplicate copy of VAT invoice.
Question What is VAT invoice?
Answer VAT invoice means an invoice issued by a registered dealer authorized to collect tax. (other than a dealer opted under section 3(2) or paying lump sum tax under section 5 of the Act.
VAT Invoice shall contain following particulars:
(a) the word “VAT invoice” in bold letters at the top or at any prominent place;
(b) the name, address and registration number of the selling dealer;
(c) the name and address of the purchaser and where the purchaser is registered under the Act the registration number of the purchasing dealer;
(d) continuous serial number running throughout the year and the date on which the VAT invoice is issued;
(e) full description of the goods;
(f) the quantity or number, as the case may be, of the goods;
(g) the value of the goods sold;
(h) the rate and amount of tax charged thereon indicated separately; and
(i) signature of the selling dealer, or his declared business manager or person authorized by the selling dealer, unless he pre-authenticates such invoice.
Question Whether input tax credit would be available on closing stocks on the date of commencement of VAT Act.
Answer Input tax credit shall be allowed on the goods other than capital goods, which had suffered tax under the repealed Act, and are lying in stock of the dealer on the date of commencement of this Act, provided that such dealer has submitted the details of such stock, as required by the Commissioner under section 93 of the repealed Act or section 91 of this Act, and such goods in stock are used for the purposes specified in clauses (a) to (f) of sub-section (1) of section 18. However, the input tax credit under this section shall be allowed to the extent of the tax paid under the repealed Act or the amount of tax payable on such goods under this Act, whichever is less.
Question What would be the extent of ITC in various cases, in respect of closing stock.
Answer - On exempted goods no ITC shall be allowed even if the goods were taxable at the time of purchase or exempt in VAT.
- For purchases from Incentive scheme units. ITC would be granted only to the extent the incentive unit has charged tax.
- Purchases from dealers paying lumpsum tax will not be entitled to get ITC.
- CST paid purchase will not be eligible for ITC.
- In case of goods imported from outside the State, no input tax credit will be allowed.
- Stock of adhat goods Set-off would be granted to the Principal who has the original invoice in his name. Agent cannot get set-off in such cases, as he is not the owner of the goods.
Question Whether furnishing of stock statement is mandatory?
Answer Yes, otherwise no input tax credit would be permitted on the closing stock of 31.03.2006.
Question Explain treatment of tax paid on purchase of capital goods:
Answer No credit shall be available, in respect of tax paid on goods purchased up to 31 March 2006. Full credit of tax paid on purchase of capital goods purchased after 31 March 2006, shall be allowed in 12 equal monthly installments provided such capital goods fall within the definition as given under the proposed VAT Act and are used for specified purposes..
Question What is the difference between zero-rated and exempted goods?
Answer In case of exemption no set-off of the input tax would be granted. Whereas, in case of zero-rating input tax credit is allowed. For example Export sales are treated as zero rated as such exporter would be entitled to get refund of the tax paid on goods exported or their raw materials.
Question How would tax be levied on works contract / lease in VAT regime?
Answer These transactions would be taxed as normal sales transactions
Question Would existing incentive / deferment granted to the industries continue and how input tax credit would be granted?
Answer As per the consensus of the Empowered Committee of the State Finance Ministers, the remaining benefit to be continued but the VAT chain should not be broken.
Question What would be the proposed time frame for payment of tax by a dealer?
Answer This is to be notified by the State Government at the time of introduction of VAT
Question Is a dealer required to file returns under VAT and at what intervals?
Answer Yes, a dealer is required to file quarterly returns in the prescribed form within 30 days of the close of each quarter i.e. a period of three months ending on 30th June, 30 September, 31st December and 31st March. However, dealer who has opted for payment of tax under sub-section (2) of section 3 or section 5 of the Act, in Form VAT-11, for the year within ninety days of the end of the year
Question What information is required to be accompanied along with the returns?
Answer The return to be filed by a registered dealer shall be accompanied with: The return required to be filed, under sub-rule (1), by a registered dealer shall accompany.-
(a) treasury receipt(s) / bank challan(s) of authorised bank as a proof of deposit of tax in accordance with section 20 of the Act;
(b) declaration forms / certificates/ forms required under the rules or the notification issued by the State Government;
(c) statement of purchases against VAT Invoices shall be in Form VAT –07;
(d) copy of statement of import against declaration, in Form VAT-48,
(e) statement of sales to registered dealers who may claim input tax credit, other than those who exercise option under sub-section (2) of section 3 or under section 5, in Form VAT– 09;
(f) statement of inter-State sales against declaration, in Form VAT-50;
(g) copy of sales return register in Form VAT-12, if applicable;
(h) proof of export as specified in rule 29, if applicable; and
(i) account of declaration forms along with details of use,
Question Who shall sign the return?
Answer Return shall be signed and verified by the dealer himself or his business manager.
Question What are the consequences of non-filing of returns?
Answer Any dealer who without reasonable cause, fails to furnish prescribed returns within the time allowed, shall be liable to pay by way of penalty: (i) in case the dealer is required to pay tax every month, a sum equal to Rs. 10 per day for the period during which the default in furnishing such return continues, but not exceeding in aggregate 20% of the tax so assessed. (ii) in all other cases, a sum equal to Rs. 5 per day subject to a maximum limit of Rs. 500 , for the period during which the default in furnishing of such return continued
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ASSESSMENT and AUDIT

Question Is there a procedure for the assessment of the returns filed by the dealer?
Answer The Act introduces the concept self-assessment for all returns filed by dealers. Accordingly, all dealers shall be deemed to have been assessed on the basis of returns filed. However, all returns filed shall be verified for correctness and in case any error is detected a revised return would have to be filed by the dealer. On timely filing of such revised return the dealer shall be deemed to have been assessed on the basis of such revised return.
Question Under what circumstances would refund be granted and when?
Answer When the net tax payable by a dealer is negative, he would be allowed to adjust the same against tax payable or outstanding CST liability and the balance if any, shall be carried forward to the next tax period or periods of the year and refund of the remaining amount shall be granted only after the end of the immediately succeeding year. However, in case exporters the refund shall be granted within a period of thirty days of the filing of the application for refund
Question What is audit?
Answer In view of the incorporation of self-assessment procedures and for promoting compliance, the concept of audit has been introduced in the Act. Based on certain pre decided criteria as well as random selection, cases will be selected for audit.
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MAINTENANCE OF RECORDS

Question What accounts are to be maintained by a dealer under VAT?
Answer - Every dealer registered under the Act shall maintain his accounts according to the system of accounting prevailing in the trade and industry.
- Every dealer shall maintain a true and correct account of his purchases against VAT Invoices and of his sales.
- Every dealer registered under the Act shall maintain separate accounts for exempted goods and so also for the goods taxable at different rates.
- .Further a manufacturer has to maintain a stock book of raw materials used and finished goods produced.
Question Where are the accounts to be kept?
Answer The accounts are required to be kept at the places of business as mentioned in the certificate of registration. In case of manufacturer, stock records have to be maintained at the place where manufacturing activity is carried on. In case of branches, accounts, registers and documents relating to the activities of the branch should be kept at the respective branch. However, final accounts, annual statements, registers and documents shall be kept at the principal place of business.
Question Are the accounts of a VAT dealer required to be audited?
Answer A VAT dealer is required to get his accounts audited by a Chartered Accountant if his annual turnover exceeds rupees forty lakhs.
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RECTIFICATION OF MISTAKE

Question In which cases can an application for rectification by made?
Answer Application for rectification can be made when the mistake is apparent from the record. It includes an order which was valid when it was made but is subsequently rendered invalid by an amendment of the law having retrospective effect or by a judgement of the Supreme Court, the Rajasthan High Court or the Rajasthan Tax Board.
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DETERMINATION OF DISPUTED QUESTIONS

Question In which cases can an application for determination of disputed questions be made?
Answer - An application for determination of disputed questions can be made to the Commissioner, whether for the purpose of the Act-
- any person is a dealer; or
- any particular dealer is required to be registered; or
- any transaction is a sale, and if so the sale price thereof; or
- any tax is payable in respect of any particular sale or purchase or if tax is payable, the point and the rate thereof; or
- any particular thing done to any goods amounts to or results in the manufacture of goods; or
- any dealer is entitled to any particular amount of input tax credit.
Question Can a question that has arisen in court proceedings be asked?
Answer No, a question that has arisen in proceedings before a court cannot be asked.
Question Can a question that arises from an order already passed under the Rajasthan VAT Act, 2003 be asked?
Answer No, such a question cannot be asked.
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APPEAL TO APPELLATE AUTHORITY

Question What is the time period within which an appeal is required to be filed?
Answer The appeal needs to be filed within sixty days of the date of communication of the order sought to be appealed against
Question Is the non-disputed tax, interest and penalty required to be paid?
Answer Yes, the non-disputed amount is required to be paid before filing of appeal..
Question What is the requirement with respect to the disputed tax, interest and penalty?
Answer In case of appeal against an ex-parte assessment, deposit of 5% of the disputed amount is necessary.. In other cases, this would be 10% of the disputed amount. For the remaining disputed amount, it can either be paid or get a stay against its recovery
Question When can an appeal be filed?
Answer An appeal to the Additional / Dy. Commissioner (Appeals) can be filed against any order of an Assistant Commissioner, a Commercial Tax Officer, an Assistant Commercial Tax Officer, a Junior Tax Officer or Incharge of a check-post or barrier.
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