What is DVAT Mechanism and Calculation of Tax Liability?
In
DVAT mechanism Manufacturer, Wholesaler or retail dealer charges tax on
sales. However the dealers are allowed to claim credit for the tax
already paid on purchase of materials sold or material inputs, and is
required to pay only the net amount of tax to the government. This
credit offset mechanism ensures that the tax des not accumulate as goods
pass from the manufacturer to the wholesaler or retailer.
Net tax payable by a dealer can be calculated between total tax charged on its sales (out put tax) during a given period and the tax paid on its purchases (input Tax) during the period. If the out put tax for the period exceeds input tax, the difference amount of tax is payable to the government. If the input tax exceeds output tax, the dealer is entitled to a refund of the excess, or to carry forward the excess to be offset against tax payable in future period.
The dealer is liable to deposit the next tax amount
on or before 21st of the next month which is due date for depositing
DVAT.
Under Delhi Value Added Tax (DVAT) Mechanism,
the tax rolls forward at each intermediate transaction to the point of
final sale to the consumer. When the goods reaches the consumers, the
total tax paid by all intermediate dealers equals the tax on the final
sale price of the goods.
Standard Rates of Delhi Value Added Tax (DVAT)
The standard rate of Delhi Value Added Tax is
12.50%.
Other rates are 1%, 5% and 20% apply to certain specified goods such as gold and silver articles, coarse grains, garments and petroleum.
What is the
Turnover Limit for mandatory registration with DVAT?
What is Registration requirement?
If the dealer
is not already registered, obligation to register and
pay tax starts on the day when
turnover exceeds Rs. 20 lakhs or the dealer make an
interstate sale or purchase. Other dealers who are
interested to register with DVAT can also register
voluntarily before reaching the turnover limit.
What is the Time limit for mandatory registration with Delhi Value
Added Tax (DVAT)?
The dealer needs to apply for
registration of VAT
within 30 days, once the turnover crosses the thresholds.