Maharashtra State Budget 2012 - MVAT and other levies

Part II of the Maharashtra State Budget – Speech of State FM Ajit Pawar on 26-03-2012.

Sales Tax/MVAT Proposals

A.      Review of Tax Collection and Computerisation of Sales Tax Department

1.      Start of Pilot Project for compiling economic data.

2.      Use of Business Intelligence and Data Warehousing Tools to interpret data.

B.      Procedural Changes in VAT

1.      New system of online verification of Input Tax Credit (ITC) (VAT paid by selling dealer).

2.      Refunds to be issued through ECS.

3.      ‘C’ forms and other declarations to be issued in electronic formats.

4.      Establishment of basic GST Network – Effective date – 1^st August, 2012.

5.      In case of delayed return, dealer shall not be able to upload return without payment of mandatory “fee” of Rs. 5,000/-. This will replace the earlier penalty.

6.      Penalty for failure to register with VAT authorities within prescribed time.

7.      Retrospective changes in provisions for e-returns, e-payments.

3.      Amendments in MVAT Act

1.      Technical amendments made which include introduction of limitation period of 3 years for applying for prospective DDQs (Determination of Disputed Questions).

2.      Increase in time limit for preservation of books of account from 3 years to 8 years. The reason for this change (which is proposed to be made retrospectively) is to bring section 86 in line with the limitation period prescribed under MVAT for assessment.

3.      Changes in definition of developer, new definitions for motor spirit, petroleum products and co-developer.

4.      Reduction in set-off on Branch Transfers outside State (Rate of Retention increased).

Reduction in the rate of set-off availed on purchased goods, which are subsequently transferred outside the state. Effective from 1^st April, 2012, the set-off is to be reduced by 4% instead of 2%.

5.      Changes in Appellate Procedure : (a) If an appellant fails to attend appellate hearings or seeks adjournment on 3 occasions, the appellant will have to pay 15% of the disputed amount or Rs. 15 crore whichever is less for the stay on demand to continue. (b) Monetary Limits on appeals to reduce unnecessary burden on system. These will be similar to provisions of 268-A of the Income Tax Act.

6.      Tax exemption on Sugarcane purchase given to sugar factories.

7.      Profession Tax - Restriction of tax liability of a person applying for new registration under Profession Tax Act to 8 years prior to application or start of proceedings.

8.      Changes in Tax Rates

Rates of MVAT :

        i.            Beedis to be taxed @ 12.5% to bring the rate close to that of tobacco and its products which are taxed @ 20%. Clarification of entry to make it more inclusive.

      ii.            LPG for domestic use was exempted from 2008 onwards. This concession has continued. It is to be taxed @ 5%.

    iii.            Plaster of Paris – rate of tax increased from 5% to 12.5%

    iv.            Raisins and currants were previously exempted from tax upto 31-5-2012. Different rates for cashew (12.5%) and other dry fruits (5%) resulted in inconvenience to dealers. Therefore, single rate of 5% is proposed for all dry fruits.

      v.            Textile processing is exempted from tax. Sales of furnishing cloth to attract 5% VAT at the last P.O.S. (Point of Sale).

    vi.            Aviation Turbine Fuel (ATF)- general VAT rate is 25%. However, in areas other than Mumbai and Pune, there is a concessional rate of 4%. This is to be increased to 5% w.e.f. 1-4-2012.

  vii.            Lower MVAT rate of 5% on tea to be continued up to 31^st March, 2013.

viii.            Rate of MVAT on cotton yarn to be reduced from 5% to 2%.

    ix.            Tax rate on writing boards and pads, examination pads, black, white or green boards, drawing boards, drawing charcoal, erasers, foot rulers, stapler, glitter pen, sketch pen, pencil leads, oil pastels and envelopes is reduced from 12.5 % to 5 %.

      x.            To promote poultry industry in the State, the tax rate on machineries and equipments used in this industry is proposed to be reduced to 5 %.

    xi.            Tax Exemption for oil and oilcakes manufactured and sold by Tel Ghani (upto a turnover of rupees 20 lakhs in a year) and certified by Khadi and Village Industries Board.

  xii.            Vegetarian food sold in sealed containers or in frozen state are taxed in many cases @ 12.5%. This rate is to be reduced to 5%.

xiii.            Reduction in tax rate from 12.5% to 5 % on adult diapers, sanitary napkins, raincoats, safety helmets, ribbons, bow and kajal, articles made from bamboo and rock salt.

xiv.            Changes in tax rates of CNG Vehicles.

Others :

        i.            Tax Collection at Source (TCS) has been made applicable to auctions of sand. TCS has also been made applicable to other notified goods. This has been done to enable notified agencies to collect some portion of tax at the time of delivery of goods to buyer.

      ii.            Purchase Tax : This is to be imposed on purchases of cotton and oil seeds from URDs (unregistered persons). The rate of purchase tax will be the same as that on sales and setoff will also be available, when selling these goods. MVAT Act is to be amended to enable levying of purchase tax.

    iii.            Entry Tax : Entry Tax of 12.5% is to be levied on Natural Gas entering Maharashtra State. This entry tax will be fully available for set-off, if the natural gas is resold. In any other case, there will be retention of 3% (viz., setoff will be available in excess of 3%).

    iv.            TDS in case of Works Contracts : In case of Works Contracts undertaken by unregistered dealers, TDS has to be deducted @ 4%. Since, the general rate of composition on construction work is 5%, TDS rate is also to be increased to 5%.

      v.            Stamp Duty on Conveyancing of Immovable Property : 3 simple rates to replace old slab system. (a) 3% for areas under Gram Panchayats (b) 4% for areas falling under Municipal Councils and Influential Areas and (c) 5% for urban areas including Municipal Corporations.

    vi.            Increase in Motor Vehicle Tax (MVT) : Increase in MVT by 2% on petrol cars and jeeps.

  vii.            Exemption on essential goods : MVAT Exemption on essential goods such as rice, heat, pulses and their flour, turmeric, chillies, tamarind, gur, coconut, coriander seeds, fenugreek, parsley (suva), papad, wet dates, solapuri chaddars and towels is to be continued upto 31^st March, 2013.

viii.            Exemption from MVAT to battery operated vehicles.

    ix.            Amnesty Scheme for Unpaid Electricity Duty. Waiver of up to 50% of interest payable by distribution companies.

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