MADHU BALA.SIP.PRESENTATION
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Transcript of MADHU BALA.SIP.PRESENTATION
SUMMER INTERNSHIP PROGRAMME 2014
PROJECT PRESENTATION
Submitted by:Madhu Bala
1014Kirloskar Institute of Advanced Management Studies
ACADEMIC YEAR 2013-2015
DOCUMENTATION and PROCEDURE of SALES
TAX(MVAT) in KPCL
Under Supervision of:
Mr. Ogale S S, DGM
Mr. Kanade R H, AGM
ACKNOWLEDGEMENTS
Faculty Guide Prof. Dr. V.S Pai
Alumuni Guide: Mr. Sunil Kumar Kataria
SIP Coordinator: Prof. Chetan G K
Objective of the Study• To study and understand the procedure and
documentation of sales tax with respect to state of Maharashtra.
• To understand its acts, rules and regulations and then see whether the same set of rules and procedures are followed in KPCL or not.
Primary Objective
• To know reasons why sales tax was replaced by VAT.• Comparison between CST 1956, VAT and SALES Tax act.
Secondary Objective
Introduction to the Concept
TAX
VAT
MVAT
• Taxes in India.• Types of taxes.
• Meaning And Concept.
• Advantages of VAT.
• limitation/criticism of VAT.
• Under Government Of Maharashtra.
• Concept, Acts And Rules.• Rates and schedules.
TAXES in INDIA
DIRECT TAX
INCOME TAX
WEALTH TAX
INDIRECT TAX
CUSTOMS SERVICE TAX EXCISE
SALES TAX
CENTRAL SALES TAX STATE TAX
VALUE ADDED TAX (VAT)
VAT is a broad-based commodity tax that is levied at multiple stages of production.
Indirect tax on the consumption of the goods, paid by its original producers upon the change in goods or upon the transfer of the goods to its ultimate consumers.
Based on the value of the goods, added by the transferor. It is the tax in relation to the difference of the value added by the transferor and not just a profit.
All over the world, VAT is payable on the goods and services as they form a part of national GDP. It means every seller of goods and service provider charges the tax after availing the input tax credit
It is the form of collecting sales tax under which tax is collected in each stage on the value added of the goods.
VAT will replace the existing system of inspection by a system of built-in self-assessment by traders and manufacturers. The tax structure will become simple and more transparent and tax compliance will improve significantly
Under VAT revenue is collected throughout the production process without distorting any production decisions
ADVANTAGES of VAT
•Simplification•Transparency•Fair and equitable•Computerization.•procedure of simplification.•Adjustment of tax paid on
purchased goods.•Greater reliance on self
assessment and voluntary compliance by dealers.
LIMITATIONS of VAT
•Burden on personal end consumer products.
•Revenue are lower.•Accounting expenses.•Increased tax passed to
consumer.•Vat avoidance.•Vat fraud.
VAT applies to all types of businesses
IMPORTERS MANUFACTURERS DISTRIBUTORS WHOLESALERS
RETAILERS WORKS CONTRACTORS
LESSERS
How VAT works
• When a dealer sell goods, the sale price is made up of two elements; the selling price of the goods and the tax on the sale.
• The tax is payable to the State Government. The tax payable on sales is to be calculated on the selling price.
• The tax paid on purchases supported by a, valid tax invoice is generally available as set-off (input, tax credit) while discharging the tax liability on sales.
EXAMPLE
Company A buys iron ore and other consumables
and manufactures stainless steel utensils
Partnership firm B buys the utensils in bulk from Company A and polishes
them
shopkeeper C buys some of the utensils and purchases packing,
material from vendor D
Vendor D packages them and sells the packed
utensils for the public.
MAHARASHTRA VALUE ADDED TAXMVAT 2002
Maharashtra is one of the 21 States which have introduced the Value Added Tax (VAT) system of taxation from 1st April 2005.
The design of Maharashtra State VAT is generally guided by the best international practices with regard to legal framework, as well as operating procedures.
The consensus has been arrived at through the discussions in the Empowered Committee of State Finance Ministers on implementation of State level VAT.
On 1st April 2005, VAT replaced the single point sales tax.
MVAT replaced 4 existing taxes
1. The Bombay Sales Tax Act, 1959.2. The Maharashtra Sales Tax on the Transfer of
Right to Use Any Goods For Any Purpose Act, 1985·
3. The Maharashtra Sales Tax on the Transfer of Property in Goods Involved in the Execution of Works Contract (re-enacted) Act, 1989·
4. The Bombay Sales of Motor Spirit Taxation Act, 1958.
Important things in MVAT
TIN
Schedule Rates
Forms Returns
Tax invoice
Audit
TIN
TIN stands for Tax-Payer Identification Number.
Is unique number allotted by Commercial tax department of respective State.
It’s an eleven digit number to be mentioned in all VAT transactions and correspondence.
Tin registration is must for Manufacture/Traders /Exporters/Dealers.
Can be done by online.
Schedule Rates in MVAT 2002SCHEDULE DESCRIPTION RATE
SCHEDULE A Essential Commodities (Tax free) NIL
SCHEDULE B Gold, Silver, Precious Stones, Pearls etc. 1 %
SCHEDULE C Declared Goods and other specified goods 5 %
SCHEDULE D Foreign Liquor, Country Liquor, Motor Spirits, etc.
SPECIFIED RATE
SCHEDULE E All other goods (not covered by A to D) 12.5%
RETURNS under MVAT 2002
•Form 704
•Dealers having annual turnover of Rs. 80 lakhs
ANNUAL RETURNS
•Dealer having tax liability of more than Rs. 10 Lacs in previous year or
•Dealer having entitlement for refund of more than Rs. 1 Crore during previous year and
•Retailer opting for Composition Scheme
MONTHLY RETURNS
•Others to file Quarterly return i.e. Liability of Rs. 1 to 10 Lacs or refund from Rs. 10 Lacs to Rs. 100 Lacs
QUATERLY RETURNS
•Dealer having tax liability of Rs. 1 Lacs or less in previous year or
•Entitlement for refund is Rs. 10 Lacs or less during previous year
SIX MONTHLY RETURNS
Tax invoiceA tax invoice can be in any form to suit business requirements. However, all tax invoices must show –
1. The words `Tax Invoice’ in bold letters either at the top or at a prominent place
2. A serial number. 3. The date of the transaction/sale/issue. 4. Description of the goods. 5. The quantity or number of goods involved in the transaction. 6. The price of the goods.7. the amount of VAT charged on the goods (this must be shown
separately) 8. A declaration certificate. 9. Supplier’s name, address and Registration Certificate number. 10. Name and address of buyer.
Business Audit
• Business Audit is a new function of the Sales Tax Department.
• Conducted by the Sales tax officials ordinarily at the dealer's place of business.
• Independent from the audit by a Chartered Accountant.
Business Audit Process
If any of the dealers business is selected for an
audit, then Sales Tax Office will inform them and then fix a suitable
date.
The audit officer will inspect the books of accounts and
supporting documents.
At that time dealer should make available any
information or documents that he may require tenable him to carry out the audit effectively and speedily.
The audit officer may like to understand dealer’s
business process and examine their stocks of
goods.
He may also like to interview the person or its
employees for this.
The audit officer cannot remove any books of accounts or
documents from their premises. However, audit officer can request
for copies
RETURN FORMS• For dealers, other than Composition dealers executing
works contract, engaged in right to use any goods and under Package scheme of incentive.FORM NO 231
• Dealers opting for composition scheme excluding works contractors / dealers opting composition for part businessFORM NO 232
• Dealers under composition for part business• Works contractors • Dealers engaged in activity of transfer of right to use goods FORM NO 233• Dealers under Package Scheme of
IncentiveFORM NO 234• Notified oil companies .FORM NO 235
ABOUT the COMPANY
KIRLOSKAR PNEUMATIC COMPANY LIMITEDHadapsar Industrial Estate
Hadapsar, Pune 411013
KPCL is one of the core group companies. Incorporated in 1958 under the chairmanship
of Late Shri Shantanurao Kirloskar. Certified for Integrated Management System
(IMS) Certifications of ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, by TUV NORD.
Started its operations with the manufacture of Air Compressors and Pneumatic Tools. New product lines were then added, including Air Conditioning and Refrigeration systems, Marine HVACR, Process Gas systems and Hydraulic Power Transmission machinery.
MISSION
To demonstrate an edge
to our stake
holders in our
offerings for
converting/transmittin
g energy. We will
strive to
make our
company an
employer of choice
VALUES
CUSTOMERS FOCUS:- Our activities / actions will be focused on enhancing internal / external customer's satisfaction
COMMITMENT: - We commit to achieve our targets / goals. We will be responsible / accountable for our commitment
CONTINUAL IMPROVEMENT:- We will consciously work to improve our procedures, processes and systems with an objective to improve our business processes
ETHICAL BUSINESS PRACTICES: - We will be fair in our dealings with all our stakeholders. It will be based on integrity , honesty and transparency
PRODUCT DIVISION at KPCL
Air conditioning, refrigeration
& process gas division (ACR
& PG)
Transmission division (TRM)
Air compressor
division (ACD)
Competitors of KPCL
Vs
VAT paid by KPCL in last 5 years
2009-10 2010-11 2011-12 2012-130
20000000
40000000
60000000
80000000
100000000
120000000
140000000
12,79,53,657
04,11,06,653
11,99,51,996
10,64,32,349
Methodology followed
PERSONAL INTERVIEW• observe things like how soon after delivery of inventory from various
divisions and subdivisions , invoices are generated, how each and every invoice is supported by valid tax FORM
DIRECT OBSERVATION• personally used to ask how and why of things. Say for instance asking
company guide how and why excel I is used in updating sales invoices and supplier and customer C forms at the end of every quarter
ON THE JOB TRAINING• At KPCL I used to actually work to get the exposure and experience.
Daily I worked for sales tax department all the major works
Tabulation and Findings
Software's used in
KPCL
Forms used in KPCL
Documents prepared in
KPCL
Software/system used in KPCL
Microsoft EXCEL• All forms are updated in excel.• On daily basis.
ORACLE• Replaced existing UNIX in 2006.• When MVAT become electronic.• Advantageous over UNIX as have ERP.
FORMS used in KPCL
C FORM
for interstate
sales
E1 FROM
direct dispatch to customers
H FORM
for export sales
2. Documents Prepared in KPCL VAT Return CST Return Sales Tax Payment Position C Form Suppliers C Form Customers VAT Audit WCT TDS Rectification Of C/ E1 Forms C Form Mail Returns C Form Letters Sales Tax JVS
ACK CST Application CA Certificate H Forms Covering Letters C Form
Suppliers Sales Tax Legal Debit Note And Credit Note C Form Forwarding Letters C FORM supplier forwarding
letters WCT TDS Purchases
a). Covering Letters C Form Suppliers
Every c form supplier is supported with a covering letter containing all the details like invoice no and value of each item in the c form and the address and other details of the suppliers.
b). ACK CST application
ACK stands for acknowledgement. An online application of C FORM is filed in favour of suppliers and in return KPCL gets an acknowledgement copy of the same.
AREA OF RESEARCH
Why VAT is preferred over sales
tax?
Difference between
VAT and CST.VAT effect
on inflation.
VAT effect on economic
growth.
Why VAT is preferred over SALES TAX?In sales tax, final sales are not covered by the tax system e.g. due to difficulty of covering all the retailers, particular commodities may not yield any tax whereas with VAT some revenue would have been collected through taxation of earlier transactions, or eliminates the problem of tax cascading, which often occurs with sales tax.
Sales tax is often applied again to the sales tax element of the cost, thus there is a problem of tax on tax. This is not the case with VAT, which makes it a neutral tax as it provides the least disturbance to patterns of production and the generation and use of income.
This is made possible by the fact that one person’s output is another’s input. As with sales tax imports are treated the same way as local goods while exports are zero- rated to avoid anti-export bias.
Difference between VAT & CSTUnder the CST Act, the tax is collected at one stage of purchase or sale of goods. Therefore, the burden of the full tax bond is borne by only one dealer, either the first or the last dealer.
The VAT system, the tax burden would be shared by all the dealers from first to last. Then, such tax would be passed upon the final consumers.
Under the CST Act, the tax is levied at a single point. Under the VAT system, the retailers are not subject to tax except for the retail tax.
Under the CST law, concessional rates are provided on certain taxes. The VAT regime will do away with such concessions as it would provide the full credit on the tax that has been paid earlier.
VAT effect on INFLATION
In considering the introduction of VAT, countries are often concerned that it would cause an inflationary spiral. However there is no evidence to suggest that this is true.
Survey of OECD countries that introduced VAT indicated that VAT had little or no effect on prices.
In cases where there was an effect it was a onetime effect that simply shifted the trend line of the consumer price index (CPI).
To guard against any unforeseen price effects the authorities may consider a tighter monetary policy stance at the introduction of VAT
VAT effect on Economic Growth
Economic growth can be facilitated through investment by both government and the private sector. Savings by both parties are required in order to finance investment in anon-inflationary manner.
Compared to other broadly based taxes such as income tax VAT is neutral with respect to choices on whether to consume now or save for future consumption.
Although VAT reduces the absolute return on saving it does not reduce the net rate of return on saving. Income tax reduces the net rate of return as both the amount saved as well as the return on that saving are subject to tax.
RECOMMENDATIONS
KPCL Finance Department particularly Sales Tax Department is maintaining all the documents and invoices as per the requirement of Department of Sales Tax under government of Maharashtra.
After the study of Documentation and Procedure of
MVAT in KPCL. No recommendations as KPCL is doing its work as
per the latest rule sand regulations of department of sales tax.
Limitations of the study
The project DOCUMENTATION AND PROCEDURE OF SALES TAX (MVAT)is a topic that revolves around laws, rules and regulations of the GOVERNMENT of MAHARASHTRA. Hence, there was very less scope for practical implementation and analysis.
It is a very vast domain and in a period of less than 8 weeks it was not possible to cover all aspects in details and study each and every law, procedure or exemption in detail.
Scope for Future Improvement
KPCL Finance Department particularly Sales Tax Department is maintaining all the documents and invoices as per the requirement of Department of Sales Tax under government of Maharashtra.
All the invoices are updated on daily basis.Hence no recommendations to KPCL on this
part.
BIBLIOGRAPHY
http://en.wikipedia.org/wiki/Taxation_in_India
http://www.archive.india.gov.in/citizen/taxes.php?id=5
http://www.authorstream.com/Presentation/aSGuest89962-890545-mvat-basics/
http://en.wikipedia.org/wiki/Sales_tax. http://kpcl.kirloskar.com/content/our-corpora
te-philosophy http://en.wikipedia.org/wiki/Sales_tax. http://mahavat.gov.in/Mahavat/MyFold/DO
WNLOADS/FORMS/DOWNLOAD_FORMS_MVAT/DOWNLOAD_FORMS_MVAT_06_03_11_3_46_16PM.pdf
http://mahavat.gov.in/Mahavat/MyFold/DOWNLOADS/FORMS/DOWNLOAD_FORMS_MVAT/Downloads-MVAT.073.pdf