MVAT RATE 4% TO 5% W.E.F 01.04.2010 LIST AMENDMENTS

Recent Amendments in MVAT Act,2002
The Government has recently effected important amendments in the MVAT Act,2002.

  • (1) The Government has issued Ordinance No. II of 2010 dated 18.02.2010, by which section 9(1) of MVAT Act has been amended. By this amendment the proviso to section 9(1) is deleted from statute book. This proviso put a limitation on the Government that it cannot amend schedules to increase the rate after two years from 1.4.2005. However, due to removal of the said proviso, now the Government can change the rates after two years also. Thus, the Government has assumed wide powers about increasing rate of tax in schedules.
  • (2) By using the expanded powers the Government has issued Notification u/s.9(1) dated 10.3.2010. By the said Notification changes are effected in Schedule A and C. On most of the goods contained in schedule C the rate of tax is increased from 4% to 5% from 1.4.2010. The important goods on which tax has been increased from 4% to 5% can be indicated as under:
    • (i) In Schedule A, the entry 45 is amended.The said entry relates to exemption for Fabrics and Sugar. Now it is provided that the fabrics and sugar specified in schedule C will not be covered by this entry. Thus the scope of exemption for fabrics/sugar is reduced by making some of them as taxable under Schedule C.However the Commissioner of Sales Tax has now issued Circular bearing No.11T of 2010 dt.17.3.2010 by which it is clarified that there is no intention to levy tax on fabrics/sugar and corrigendum is issued to rectify the position created by above notification dated 10.3.2010. Therefore at present the old position i.e. fabrics/sugar not liable to tax, will continue.
    • (ii) Schedule C is amended.As per present position the rate of tax for all entries (i.e. all goods) contained in schedule C is 4%. Now for most of the entries the rate is increased to 5%. Thus effectively the tax is increased by 1%. The indicative list of goods for which tax rate is increased is as under:


 (ii) Schedule C is amended.
As per present position the rate of tax for all entries (i.e. all goods) contained in schedule C is 4%. Now for most of the entries the rate is increased to 5%. Thus effectively the tax is increased by 1%. The indicative list of goods for which tax rate is increased is as under: Sr.
No.
Entry in schedule C
Indicative description
New rate
With effect from
1.
1
Agricultural machinery and
implements, and components and parts thereof other than tractors, trailers, semi-trailers, oil engines, electric motors, pumps, electric pumping sets, capacitors of all types and pipes of all types.
5%
1.4.2010
2.
2
All equipments for electronic
communication by wireless or by wire including Private Branch Exchange (P.B.X) and Electronic Private Automatic
Branch Exchange (E.P.A.B.X)
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3.
3
All kinds of bricks including fly ash bricks and refractory bricks and monolithics, asphaltic roofing tiles, earthen roofing tiles.
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4.
4(b)
Yarn (other than cotton yarn) sewing thread, waste of any of them,
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Friday, March 19, 2010

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