Value-added taxation in India

Value-added tax (VAT) was introduced into the Indian taxation system from 1 April 2005. The existing general sales tax laws were replaced with the Value Added Tax Act (2005) and associated VAT rules.

A few states (Gujarat, Tamil Nadu, Rajasthan, Madhya Pradesh, Chhattisgarh, Jharkhand, Uttarakhand and Uttar Pradesh) opted to stay out of VAT taxation system during the initial introduction of VAT but adopted it later.

As of 2 June 2014, VAT has been implemented in all the states and union territories of India except Pondicherry, Andaman and Nicobar Islands and Lakshadweep Island.

VAT was replaced by Goods and Services Tax, all over India from 1 July 2017.

States where VAT is applicable

Gujarat

The Government of Gujarat had pass the "Gujarat Value Added Tax Act, 2003" (Act) in 2003 and specified that the date of implementation (appointed date) of the same would be notified later. Accordingly, the Government of Gujarat has vide notification no. GHN – 14/VAT-2006/S.1.(3)(1)-TH dated 29 March 2006 notified that the appointed date for implementation of VAT regulations in the State of Gujarat shall be effected from 1 April 2006.

However "The Central Sales Tax Act, 1956" (Central Act) which levies sales tax on inter-state sales is still effective and all inter state sale and purchase transactions effected after 1 April 2006 in the State of Gujarat shall continue to be subject to levy central sales tax as applicable earlier.

In Gujarat, "DVAT" Act 2003, will merge three existing state taxes:
Gujarat Sales Tax Act, 1956
Bombay Sales of Motor Spirit Taxation Act, 1958 Gujarat Purchase Tax on Sugarcane Act, 1989 ^[1]

Rates under VAT:

The Gujarat Value Added Tax Act, 2003 - Schedule

Schedule No	Description
Schedule 1	Goods, the sales or Purchase of which are exempt from tax
Schedule 2	List of Goods Taxable at 5% and other rates as specified in the schedule
Schedule 3	List of Goods Taxable at special rates
General Category	Goods not specified in any other schedule taxable @ 15%
#Vat Schedule Details [1]

Maharashtra

The system of Value Added Tax (VAT) has been implemented, in the State of Maharashtra, w.e.f. 1 April 2005. Every dealer, who becomes liable to pay tax under the provisions of MVAT, shall apply electronically for registration, within 30 days from the date of such liability. VAT is implemented by Department of Sales Tax. Their site address is: Department Of Sales Tax - Govt. of Maharashtra

Rate of tax:
Schedule ‘A’ – Essential Commodities (Tax free) - Nil
Schedule ‘B’ – Gold, Silver, Precious Stones, Pearls etc. - 1.2%
Schedule ‘C' – Declared Goods and other specified verry goods - 6% (Rates for items other than declared goods changed to 6%)^[2]
Schedule ‘D’ – Foreign Liquor, Country Liquor, Motor Spirits, etc. - 20% and above
Schedule ‘E’ – All other goods (not covered by A to D) - 13.5% with EFF CT from 17.09.2016

Delhi

DVAT 2004 as amended by DVAT 2005 and DVAT Rules 2005 came into force w.e.f. 1 April.,2005. It repealed Delhi Sales Tax Act 1975, Delhi Sales Tax on Works Contract Act, 1999, Delhi Sales Tax on Transfer to Right to use Goods Act 2002 and Delhi Tax on Entry of Motors Vehicles into Local Areas Act 1994.^[3]

Value-added tax depends on the product and services.

Jammu & Kashmir

Value added tax for the state Jammu & Kashmir includes multiple products such as cooked food, saffron, honey, electrical items, textile items such as durries, quilts, Pashmina wool etc. Apart from the applicability of VAT, the govt also made some exemptions on basic food items, industrial units, hotel, and farming equipment.

Kerala

The Kerala Value Added Tax Act (KVAT) 2003 was the governing act for Value Added Taxes in Kerala. Kerala Value Added Tax (Act 30 of 2004) came into force on 1 April 2005.^[4]

References

^ http://lemonconsulting.net/lc/legal/itax/form/gnvat.pdf ^{[dead link]}
^ "Change in rate of MVAT 5.5% to 6% w.e.f. 17th September 2016" (PDF).
^ "Documents, Procedures & Formalities required for VAT Registration in Delhi". TopCAfirms. Retrieved 3 December 2013.
^ "History of Sales tax in Kerala – Kerala GST – State Goods and Services Tax Department". Retrieved 19 February 2022.

External links

Department of Revenue, Ministry of Finance, Government of India

[1] ttp://lemonconsulting.net/lc/legal/itax/form/gnvat.pdf ^{[dead link]}

[2] "Change in rate of MVAT 5.5% to 6% w.e.f. 17th September 2016" (PDF).

[3] "Documents, Procedures & Formalities required for VAT Registration in Delhi". TopCAfirms. Retrieved 3 December 2013.

[4] "History of Sales tax in Kerala – Kerala GST – State Goods and Services Tax Department". Retrieved 19 February 2022.

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v t e Taxation in India
Taxes	Central Excise Duty Goods and Services Tax Income tax in India Securities Transaction Tax Service tax Value-added taxation
Bodies	CBDT Chairperson, Central Board of Direct Taxes Investigation Division of the Central Board of Direct Taxes Central Board of Excise and Customs Chairperson Central Board of Excise & Customs Income Tax Department Central Economic Intelligence Bureau Directorate of Revenue Intelligence Tax Administration Reform Commission
Legislations	Benami Transactions (Prohibition) Act, 1988 Expenditure Tax Act, 1987 Finance Act (India) Gift Tax Act, 1958 Interest Tax Act, 1974 The Income-tax Act, 1961 Wealth Tax Act, 1957
Schemes	Income declaration scheme, 2016 Pradhan Mantri Garib Kalyan Yojana Voluntary Disclosure of Income Scheme
Compliance	Income Tax Returns ITR-2 SUGAM ITR-4S Indian tax forms Tax Collected at Source Tax Deducted at Source Tax Deduction and Collection Account Number
Notable cases	Cairn Energy and Government of India dispute