DEPARTMENT OF TRADE AND TAXES
GOVERNMENT OF NCT OF DELHI
CITIZEN CHARTER 2008
OUR MOTTO : PUTTING PEOPLE FIRST
OUR MESSAGE : VALUE ADDED TAX IS YOUR MONEY FOR YOUR CITY
OUR MISSION :
A courteous, helpful and citizen-friendly attitude towards people.
Sustained efforts to improve the standards and quality of service
To seek cooperation of citizens for obedience and implementation of the laws.
OUR VISION: BHAGIDARI
YOUR TAX MONEY CONTRIBUTES TO THE GROWTH AND DEVELOPMENT OF DELHI, MAKING IT A WORLD CLASS CITY
WE EXPECT
YOU PAY TAX AND INSIST ON OBTAINING INVOICE FROM THE SELLER.
EVERY DEALER ISSUES INVOICE TO THE BUYER, COLLECTS TAX AND PAYS IT TO THE GOVERNMENT TIMELY.
1. DELHI VALUE ADDED TAX (DVAT) ACT, 2004. Salient Features :
DVAT is a multi-stage tax on sale of goods, work contract, lease and hire purchase in Delhi.
Delhi Value Added Tax Act, 2004 replaced four statutes: Delhi Sales Tax Act, 1975, Delhi Sales Tax on Works Contract Act, 1999, Delhi Tax on Entry of Motor Vehicles into Local Areas Act, 1994 and Right to Use Goods Act, 2002.
MECHANISM
Taxable Sales X Tax Rate = Tax charged on Sales
Tax charged on Sales = Output Tax
Tax paid on Purchases = Input Tax
Net Tax (if positive) = Tax payable
Net Tax (if negative) = Tax Refundable
All interstate transactions are still governed by the Central Sales Tax (CST) Act, 1956. You can offset your CST liability against output tax payable under the DVAT.
2. Some basic concepts for calculation of DVAT
"Output Tax" is the tax you charge on sales.
'Input Tax' is the tax (DVAT) paid on your purchases of business inputs. Tax payable is output tax reduced by input tax.
When you do not file a proper return within the due dates, your tax liability is assessed by default assessment.
Registration under DVAT Act
3.1 Compulsory, if:-
Your turnover in the current year exceeds Rs. 10 lakhs (manufacturer, traders, works contractor, hire-purchase business etc.) ; or
You make any interstate sale; or
You make interstate purchases for resale in Delhi
You can also apply voluntarily for registration even if your turnover is below Rs. 10 lakhs.
A single registration is enough for having more than one place of business in Delhi.
3.2 How to Register?
Apply in Form DVAT 04 with the prescribed fee of Rs. 500/- and a security of Rs. 1 lakh. Fee is payable in the form of court fee stamp. For Registration under the
Central Act, the fee is Rs. 25/-.
The security amount can be reduced by a maximum of Rs. 50,000/- if you can provide certain documents with your registration application. The security amount is reduced to the extent of amount mentioned against each head allowed for various documents is as follows:-
Last paid electricity bill in your name, Rs. 10,000/-.
Paid telephone bill in your name Rs. 5000/-
Income Tax PAN, Rs. 10,000/-
A document as proof of ownership of principal place of business, Rs. 30,000/-
A document as proof of ownership of residential property, Rs. 20,000/- and
A notarized photocopy of the passport of proprietor/managing partner or managing director-Rs. 10,000/-.
Remaining security may be in form of Bank Guarantee, Post Office cash certificates, bonds, debentures, dealers surety or mortgage of immovable properly.
You are automatically registered within 15 days of making your application and a Tax payer Identification Number (TIN) will be issued, to you. This TIN will be common for both DVAT as well as CST Act.
However, your applications may be rejected for certain reasons which will be communicated to you.
3.3 Rights and Duties of a Registered Dealer
To collect tax through a proper invoice and pay to us:
To claim input tax credit;
To file periodic returns; and
To prepare and maintain proper records and books of accounts.
4. For Amendment of Registration Certificate
Apply within one month in Form DVAT 07 if you:-
Sell your business or any part of it;
Change your place of business, warehouse or open a new place of business or close the business for a period of more than one month.
Change the name, style, constitution or nature of your business and firm /company.
5. De-registration/Cancellation of Registration
Apply in Form DVAT 09 within 30 days from the day:
You cease to carry on any activity which entitled you to be registered as a dealer under the DVAT Act;
Your firm or Association of persons is dissolved:
You cease to be liable to pay tax under the DVAT Act: or
Owner of a proprietorship business dies, leaving no successor
After cancellation/de-registration you will have to pay tax on the stock in hand on the date of de-registration as per the DVAT Act, 2004.
6. Registration of a Casual Trader
If you make sales on an occassional basis e.g., during an exhibition or at the Trade Fair, you would need to apply for registration as a Casual Dealer.
As a casual dealer, you need to apply for registration in Form DVAT 04 A at leastthree days prior to the commencement of business activities in Delhi. You need to register and account for DVAT regardless of the volume of your turnover. You may be asked to deposit security in the form of bank draft as may be fixed by us which will not exceed the estimated liability to pay tax for seven days or for a lesser period for which you are conducting your business.
A casual trader :
Must pay tax daily on the sales made on the previous day
Must submit a DVAT tax return in Form DVAT 16 A after conclusion of total business in Delhi.
Cannot issue a tax invoice.
Will be refunded the balance amount of security, after adjusting any tax or dues payable.
7. Rates of Tax under DVAT Act
The DVAT Act prescribes the following rates of tax on different types of goods;
1% Rate: Goods listed in the Second Schedule
4% Rate: Goods listed in the Third Schedule; and the printing works
20% Rate: Goods listed in the Fourth Schedule
12.5% Rate: Goods involved in the execution of works contract except printing works
12.5% Rate: Any goods not mentioned in the Second, Third and Fourth Schedules above, or in the First Schedule (Exempted goods)
Rates ranging from 0.1% to 3% for certain categories of dealers availing composition scheme.
8. Tax Invoice- an important document
A Tax Invoice is a legal document, which shows the DVAT payable/paid for a transaction. Irrespective of the accounting basis that you follow, you can claim a tax credit only if you hold a valid tax invoice at the time of furnishing your return for the tax period.
Every registered dealer must keep a copy of all tax invoices issued by him. Every dealer must preserve the originals of all tax invoices received by him.
8.1 What should a Tax Invoice contain
the words 'Tax Invoice" in a prominent place;
name, address and TIN/registration number of the selling dealer.
Name and address of the purchaser;
TIN/registration number of the purchaser, if he is registered;
individual pre-printed number and date of issue of invoice, description ,quantity, volume and value of goods and tax charged; and
signature of dealer or his/her representative.
8.2 Duplicate and Proforma Tax Invoices
If the buyer loses his tax invoice, you may issue him a copy clearly marked 'duplicate'. You may issue a computer printed invoice subject to the following:
Maintain a series number for all invoices, and
Retain the duplicate copy.
You may also use the format of tax invoice for issuing Proforma invoices. However these should be clearlymarked 'Proforma invoice, not for tax credit.'
8.3 Retail Invoice
A retail invoice is issued by registered dealers for all sales of above Rs. 25/- where a tax invoice is not issued.
8.4 A Retail Invoice should contain:
the words 'Retail Invoice" or "Cash Memorandum" or "Bill" in a prominent place.
The name address and TIN/registration number of the selling dealer.
In case of interstate sales, the name , address and TIN/registration number of the purchasing dealer and type of statutory form against which the sale has been made.
Individual serialized number and date of issue of the invoice.
Description , quantity, volume and value of goods and services provided inclusive of amount of tax charged.
Signature of the dealer or his representative.
8.5 We trust you
Your return is self-assessment of your tax liability.
8.6 How and where dealers should pay tax
You may pay the tax, together with any interest, penalty or any other amount due from you in rupees in any of the following ways:-
(a) Cash (b) crossed cheque; or ( c) bank draft made in favour of "Commissioner Delhi Value Added Tax" and drawn on an authorized bank:
Such amounts may be paid in any of the above-mentioned ways through a tax deposit challan (Form DVAT 20) at:
(a) a Delhi branch of the Reserve Bank of India;
(b) a Delhi branch of an authorized branch of an authorised bank, Names of Authorized banks are as under:
State Bank of India (ii) Union Bank of India (iii) Canara Bank (iv) Bank of Baroda (v) Punjab & Sind Bank (vi) Indian Overseas Bank (vii) IDBI Bank Ltd (viii) Axis Bank Ltd. (ix) HDFC Bank (x) ICICI Bank Ltd. (xi) Syndicate Bank (xii) Corporation Bank(xiii) Indian Bank.
On- Line Payment Scheme
Dealers having bank account with the following banks can avail the facility of
e-payment :- (i) HDFC (ii) Axis (iii) State Bank of India.
9. Schedule for filing your return (DVAT 16)
GTO in preceding Year / Periodicity of Return / Time Limit for deposit of tax and filing of returnGTO-Rs.10 lakhs or below / Yearly / Tax on quarterly basis within 28 days from the end of the quarter to which payment relates but return should be filed within 75 days from the end of the Return period, which is one year.
GTO above Rs. 10 lakhs but
upto Rs. 50 lakhs. / Half Yearly / Payment of tax on quarterly basis within 28 days from the end of the quarter to which payment relates but return should be filed within 45 days from the end of the Return period, which is six months.
GTO above Rs. 50 lakhs but upto Rs. 5 crores. / Quarterly / Payment of tax and filing of return on quarterly basis within 28 days from the end of the quarter. The dealers filing quarterly returns are required to file returns
electronically also within 25 days of the end of their tax period.
GTO above Rs. 5 crores. / Monthly / Payment of tax and filing of return on monthly basis within 28 days from the end of the month. The dealers filing monthly returns are required to file returns electronically also by 25th of the month following the month of tax period.
10. Revised Return
Revised returns can be filed for corrections of omission and errors in DVAT 16.
10.1 Annual Reconciliation Statement (DVAT 51)
In addition to the periodic filing of CST returns, a Reconciliation Statement in Form DVAT 51 must also be submitted. The CST Reconciliation Statement is to be submitted within three months of the end of the relevant quarter.
All statutory declaration forms such as Form C, Form E-1 and Form E-II etc on which concessional rate of CST was availed, will have to be submitted alongwith the Reconciliation Statement in support of such concessional rate.
The Reconciliation Statement seeks to consolidate and reconcile all the details in relation to the CST that were reported by the dealer.
11. Refund = Input Tax Credit- Output Tax where ITC exceeds OT.
You may elect to:
take the refund in cash; or
carry forward the amount to the next tax period as a tax credit.
If you choose to take the refund in cash, we will pay the refund within one month of your filing the return or making the claim in case of monthly return filers and for two months in case of other dealers, unless it is withheld for reasons which shall be intimated to you.
11.1 Manner in which a Claim of Refund is to be made
Your return in form DVAT 16 is also the claim for refund. Other claims may be made in form DVAT 21.
A claim for refund by an embassy, consular office or other organization referred to in the Sixth Schedule appended to the DVAT Act has to be made in Form DVAT 23 on a quarterly basis. It should be accompanied by a Letter of Authority.
Refund is released by a refund order in Form DVAT 22. The refund amount is transferred electronically to your bank account that you have intimated to us.
Security for Cash Refund may be asked from you for an amount not exceeding the amount of refund to be granted by issuing a notice in Form DVAT 21A.
12. SPECIAL TRANSACTIONS
12.1 Second Hand Goods
Second- hand goods are also taxable. Tax credits for any purchase of second-hand goods is allowed as per provisions of DVAT Act :-
if you are a registered dealer and sell second-hand goods.
If you purchased the goods from a resident seller who is not registered under DVAT.
You have adequate proof of the amount paid for the goods;
the goods were purchased as stock for resale in the same form or as raw materials for other goods and the sale of the goods or the goods into which they were incorporated is liable to DVAT.
If the amount paid for the second- hand goods is more than Rs. 2000/- the input tax credit will be allowed only in the tax period when the goods are resold.
12.2 Hire purchase
The transfer of goods by hire-purchase is deemed to be sale and the time of sale is when the hire purchase agreement is executed. Tax should be computed and paid on the total price payable (including all future installments) under the hire purchase agreement. The tax must be paid within 28 days from the end of the tax period in which the agreement is executed.
12.3 Lease
The transfer of the right to use any goods for any purpose ( i.e. whether or not for a specified period for cash, deferred payment or other valuable consideration is a 'sale' under the DVAT Act in Delhi or outside Delhi. Input tax credit on purchases made for leasing business is allowed).
The amount of tax payable in respect of a lease during a tax period is the portion of the sale price for the lease that is due and payable during the relevant tax period.
12.4 Works Contract
A works contract would include an agreement executed by you for building construction, manufacture, processing, fabrication, erection, installation fitting out, improvement, repair or commissioning of any movable property.
Tax is payable on any transfer of property in goods during the course of execution of a works contract. The turnover of work contract includes labour services and office expenses.
13. Tax Deduction at Source(TDS)
Tax deduction at source @ 2% of the Bill amount in respect of works contracts will be made by the contractees (whether registered dealers or not) to whom property in goods is transferred through a works contract by a dealer or contractor who must deduct tax at the rate of 2% from the payment they release towards such transfer to the dealer or contractor. They will issue a certificate in Form DVAT 43 to the dealer/ person transferring property and deposit the tax so deducted in the government treasury before the expiry of 15 days following the month of which the deduction is made.
A person required to deduct tax at source shall apply for registration in Form DVAT 44 and obtain a Tax Deduction Account Number (TAN) with in 7 days from the date on which tax was first deducted or deductible. TAN will be issued in form DVAT 45.
Persons who have been allotted TAN are required to deposit the tax deducted within fifteen days following the month in which deduction is made and file a TDS return in form DVAT 48 within a period of 28 days from the end of the year in which the tax is deducted.
Any delay in depositing of the TDS amount and failure to file TDS returns is subjected to interest and penalties.
The works contractor/dealer on whose behalf the tax has been deducted at source can claim a credit for the TDS amount in the tax period in which he is issued the TDS certificate.
14. Composition Scheme
The composition scheme is an elective option which can be exercised by making an application in Form DVAT 01 within 30 days from the first day of the beginning of the financial year. The option may only be reversed after the end of the year for which the option is made. The application for the reversal of the election for this scheme is made in Form DVAT 03 within 30 days from the first day of the beginning of the financial year.
Composition Scheme is also available for the dealers dealing in bullion, medicine and works contracts.
14.1 Tax payable under composition scheme
Tax payable under the composition scheme is 1% of the turnover of sale of the dealer. The tax applies to turnover of sales of all goods( including goods which are exempt from tax under the DVAT Act).
Tax is payable @ 0.1% by bullion dealers opting for composition scheme.
For composition dealers dealing in medicines, the rate of tax is 1%.
The Works Contractors opting for composition scheme are required to pay tax @ 2.5% if all the turnover is under Local Act and @ 3% if the turnover includes inter-state transactions also.