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Microsoft PowerPoint - Clause by clause Disussion- DVAT Audit.pps

UnderDVATAct

By:CASandeepGarg

M:09971133229Email:casandeepgarg@gmail.com;

http://www.simpletaxindia.net/2013/09/audit-under-delhi-value-added-tax-dvat.html

AuditunderDelhiVAT

Contents

Introduction to VAT Audit 1

Applicable Provisions2

Notification3

Calculation of Gross Turnover4

Form AR-I5

Conclusion6

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AuditunderDelhiVAT

Introduction to VAT Audit

Theoverallobjectiveofthesystem is tomaximize the

collection of VAT Revenuebymaximizing the level ofvoluntary compliance and

bydeterringevasion.

Theprincipleofcheckingofsubmittedreturnsbygoing

throughbooksofaccountshas been assigned to the

Professional CharteredAccountants.

In India, VAT Auditis compulsory in all

except 4 States,(subject to

Turnover limits forthedealers)

AndraPradesh

Haryana

HimachalPradesh SikkimDelhi

Till recently, Delhiwas apartofthis list.However,the Delhi Government

hasnotifiedthataDealerwith a Turnover of over

Rs. 10 crore has tosubmit a VAT Audit

report.

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If, in respectofanyparticular year, thegross turnoverofadealerexceedssixty lakh rupees or such other amount asmay be prescribed, then, such

dealer shall submit a report in suchmanner, form and period asmay benotifiedbytheCommissioner.

AuditunderDelhiVAT

Applicable Provisions

Section49

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PriortoAmendment:A dealerwhose gross turnover in a year exceeds the prescribed limit as fixed for the

purpose,undersection44ABoftheIncomeTaxAct,1961asamendedfromtimetotimeoranyotherlawsubstitutingtheAct,heshallgethisaccounts ofsuchyearauditedbyan

accountant,aspertheprovisionsofsection49.

DateofAmendment: 31st March,2013PostAmendment:

For thepurposeof Section49, adealerwhose gross turnover in a year exceedsonecrorerupees,shallgethisaccountsofsuchyearauditedbyanaccountant,andshallbe

liabletosubmitareport,asnotifiedbytheCommissioner,from timetotime:PROVIDEDthattheCommissionermay,byanorder,requireadealerorclassorclasses

ofdealers,tosubmitasimplifiedversionofthereport in lieu ofreportnotifiedbyhimundersection49,

PROVIDEDFURTHERthattheCommissionermay,byanorder,exemptadealerorclassorclassesofdealers,fromfurnishingareport,forthepurposeofSection49.

AuditunderDelhiVAT

Applicable Provisions

Rule42A

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AuditunderDelhiVAT

Notification

Issueofnotificationno.F.7/420/Policy/Vat/2011/12031213dated11th Feb,2013madeAuditunderDelhiVATcompulsoryfordealershavingaturnovermorethanRs.10crore.

Priortothenotification,AuditunderDVATwasgovernedbySection49alongwithRule42AoftheAct.

Section49states,if,inrespectofanyparticularyear,thegrossturnoverofadealerexceedssixtylakhrupeesorsuchotheramountasmaybeprescribed,

then,suchdealershallsubmitareportinsuchmanner,formand periodasmaybenotifiedbythecommissioner.

Rule42Areadsasadealerwhosegrossturnoverinayearexceedstheprescribedlimitasfixedforthepurpose,undersection44aboftheincome taxact,1961as

amendedfromtimetotimeoranyotherlawsubstitutingtheact, heshallgethisaccountsofsuchyearauditedbyanaccountant,aspertheprovisionsofsection

49. (Amendedon20thmarch,2013)

P

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This notification is applicable only for the dealers whose Gross TurnoverexceedsRs.10crorein201112oranyofthesubsequentfinancialyears.

Thefollowingareexemptfromthepurviewofthenotification: Dealers exclusively dealing in commodities listed in the First schedule

appendedtotheact. Dealerswith100%exportturnover.

Accordingtothenotification,everydealerliabletogethisaccountsauditedasper Section 49 readwithRule 42A of theDVATAct, shall submit the audit

reporttothedepartmentinthefollowingmanner: Intheprescribedform:FormARI

Withinsevenandahalfmonthsfromtheendoftheyear.

Notification no. F.7/420/Policy/VAT/2011/12031213 was issued by thecommercialtaxdepartmentofDelhion11thFebruary,2013.

AuditunderDelhiVAT

Notification

Issueofnotificationno.F.7/420/Policy/VAT/2011/12031213dated11th Feb,2013madeAuditunderDelhiVATcompulsoryfordealershavingaturnovermorethanRs.10crore.

A

f

t

e

r

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AuditunderDelhiVAT

Applicability of Notification

Thisnotificationisapplicableonthefollowing:

AdealerwhoseGrossTurnoverexceedsRs.10crorein201112 oranyofthesubsequentfinancialyears.

ThedefinitionofTurnoverunderDelhiVAT istheaggregateoftheamountsofsalepricereceivedorreceivable bytheperson inanytaxperiod,reducedby

anytaxforwhichthepersonisliableundersection3ofthisAct

Thefollowingareexemptedfromtheapplicabilityofthenotification: Dealers exclusively dealing in commodities listed in the First Schedule

appendedtotheDelhiVATAct. TheFirstSchedulecontainsthelistof85exemptedcommodities under

DVAT. Dealerswith100%exportturnover. First Schedule

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AuditunderDelhiVAT

Who is Liable for VAT Audit

S.N. NatureoftheDealerBaseduponTurnover

Exemption,ifany.

1. DealerswhoseGrossTurnoverdoesnotexceedRs.1crore

NotliableforVATAudit

2. DealerswhoseturnoverexceedsRs.1crorebutislessthanRs.10crore

FormofAuditReportanditstimeandmanneryet

tobenotifiedbytheCommissioner.

3. DealerswhoseGrossTurnoverisRs.10croreormore.

1) Dealersexclusivelydealingin

Commoditieslistedinfirstscheduletothe

ACT2) Dealerswith100%

exportTurnover.

Form FormAR1

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AuditunderDelhiVAT

Time limit and Penalty

AuditReportinFormAR1tobesubmittedwithin Seven and half months from the

dateoftheFinancialyearinduplicate.

As per section 86(18) of Delhi VATAmendment Act, 2013, in case the dealer

fails tocomplywith theprovisionofaudit,thedealer shallbe liable topaypenalty,a

sumequalto1%ofhisTurnoverorsumofonelakhrupee,whicheverisless.

Issue: ????

P en a

l t y

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AuditunderDelhiVAT

Calculation of Gross Turnover

Part4oftheformprescribesforthecalculationofGrossTurnover.

Includes

TaxableSales(including

CentralSales)

ConsignmentSales/Stock

Transfer

JobWorkCharges(In

caseofWorksContract,the

fullvalueofthecontractis

considered) GoodsspecifiedintheFirstSchedule PenultimateExportsu/s5(3)oftheCSTAct

Labour&ServiceChargesinvolvedintheexecutionofWorksContract

SaleofCapitalGoods(Refersection6(3)ofDVAT) DealersspecifiedintheFifthScheduleOthers

ExemptedSales

GTO

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AuditunderDelhiVAT

How to Calculate Gross Turnover Particulars Rs.

SalewithinDelhiTaxableunderDVATACT XXX

Add: InterStateSale XXX

Add: SaleinCourseofImportandexportincludingpenultimateexport XXX

Add: StockTransferfromDelhitoBranches/agentsinOtherState XXX

Add: ExciseDuty(LocalandCentral)andCustomDuty XXX

Less: DVAT/CSTpayablebythedealer..(Ifalreadyincluded) XXX

Less: CostofFreightordeliveryseparatelychargedintheInvoice;providedthattheownershipofthegoodsisnottransferredatthebuyers

place

XXX

Less: CostofinstallationseparatelychargedintheInvoice XXX

GrossTurnover XXXXhttp://www.simpletaxindia.net/2013/09/audit-under-delhi-value-added-tax-dvat.html

AuditunderDelhiVAT

Points for Discussion Gross Turnover

TurnoverasperDVATReturnorP&LAccount. TurnoverofDelhiofficeorEntireEntity Turnoverof201112and201213 Acriteria Exemption to Dealers exclusively dealing in Exempted

Goods.

ExemptiontoDealerswith100percentExportTurnover.

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AuditunderDelhiVAT

Relevant Definitions

Turnover

Goods(Section(2m) CapitalGoods

Under Section 2(zm) ofDVAT Act, "turnover"

meansthe aggregate of the

amounts of sale pricereceived or receivablebythepersoninanytax

periodreducedby any tax forwhich the person is

liableundersection3ofthisAct;

"goods" means every kind ofmoveable property (other than

newspapers, actionable claims,stocks, shares and securities) and

includeslivestock, all materials,

commodities, grass or thingsattached to or forming part of the

earth which are agreed to besevered before sale or under a

contractofsale;andproperty in goods (whether as

goods or in some other form)involved intheexecutionofaworks

contract, lease or hirepurchase orthose to be used in the fitting out,

improvement or repair of movableproperty;

CapitalGoodsUnder Section 2(f) of

DVAT Act, "capitalgoods"means

plant,machineryand

equipmentuse