Proposals regarding VAT & Professional Tax in the Maharashtra Budget for the year 2016-2017.

(1) Changes made in Maharashtra Value Added Tax Act, 2002 :

(A) Changes in VAT rate schedule in vide Notification No. VAT. 1516/C.R. 31/Taxation-1 dated 30/03/2016 -  Effective date: 01/04/2016

(i) General rate of tax on goods, except declared goods, is enhanced from 5% to 5.50%

(ii) The prevailing rate of tax of 5% on petrol, diesel and some other items which  were revised on 01/10/2015 shall continue to be the same for 1 more year.  i.e @5% upto 31/03/2017.

(iii) Tax rate on tea shall be 5.50% upto 31.03.2017

(iv) Tax rate on sweet corn is proposed at 5.50%

(B) New Exemptions:

Exemption from tax is proposed for the following goods:

(i) Activity of Warping and sizing on yarn

(ii) Buses operated on battery or hybrid fuel used for public transport and which are proposed by public transport undertakings

(iii) Retrofit kit for vehicles of differently abled persons

(iv) Medicines and instruments for dialysis

(v) Mammography machines used for detection of breast cancer

(vi) Bamboo handicraft products, except, bamboo furniture

(vii) Exemption from CST is proposed on the resale of goods brought from outside the state and packed or repacked inside the logistics hub.

(viii) Purchase tax on Sugar cane shall be exempted for the year 201516 for those sugar factories who meet the export obligations as per government policy

 (C) Reduction in VAT Rate:

Tax rate has been reduced from 12.50% to 5.50% on following products:

(i)  Barbed wire, wire mesh and chain links

(ii) Pyrolysis Oil produced by processing plastic waste and other organic Waste

(iii) LED tubes

(iv) Pencil Box, all types of gum, glues and sticks, stapler pin, tape  dispenser, duster and all types of files.

(v) Sale of used vehicles by banks and financial institutions for only such vehicles on which sales tax or entry tax has been paid at the earlier stage

(vi) Sterile water for injection

(D) Increase in tax rates:

 Rate of tax is increased on following products:

(i)  Coconut oil sold in packaging upto 500 ml -  from 5% to 12.50%

(ii) Tax of 5.50% is proposed on terry towels mainly used in hotels.

(iii) Hair oil shall be excluded from the entry of drugs

(iv) Tax @ 2% on cotton seed is proposed

(E) Changes in Composition scheme

 (i) Yearly turnover limit for retailers is enhanced from Rs 50 Lacs to 1 Crore

(ii) For bakeries it is proposed to exclude turnover of tax free goods

(iii) Rate of composition for hotels, restaurants, etc is proposed to be increased to 8% if the turnover of food and non-alcoholic drinks in previous year has exceeded Rs. 3 crores

(F)  Proposals on WCT TDS

(i) Employer awarding contract shall be liable to obtain registration for TDS and return containing TDS details shall be filed by the employer.

(ii) If principal contractor awards the contract to subcontractor, then the credit of the TDS can be transferred by the contractor to the sub-contractor

(G) Others – General

 1. It is proposed to give powers to assess a dealer on the basis of fair market price if goods are sold below market price with intention to evade tax.

2.  Registration of dealer shall be cancelled if false documents are submitted for obtaining registration

3. Dealers can file revised return multiple times before due date for filing of audit report

4.  Returns of dealer filed within prescribed date shall be deemed to have been accepted after the expiry of period of 4 years if notice is not issued till then

(H) Amnesty scheme

Applicable to the Dealers

(i) who have filed an appeal and the recovery of disputed dues is stayed by the  appellate authority.

(ii) Who withdraws the appeal

Relief Granted  

(i) For the periods before 01.04.2005 – If the Dealers pay the disputed tax in full, then the  corresponding interest and penalty shall be waived

(ii) For the periods from 01.04.2005 to 31.03.2012 – If the Dealers pay the disputed tax amount and 25% of disputed interest, then the corresponding balance interest and penalty shall be waived.

(iii) Amnesty can be availed even for some of the issues pending in Appeal

(iv) Amnesty scheme shall be available from 01.04.2016 to 30.09.2016

 (2)  Changes in Profession Tax

(i)  Unenrolled persons under PT Act applying for enrolment between  01/04/16 to 30/09/2016 and also enrolment application pending on 01/04/2016, need not pay PT and penalty for period exceeding previous 3 years prior to application

(ii) Armed members of CRPF and BSF shall be exempted from PT

(iii) Aided educational institutions who have not filed mandatory e-returns will be exempted from paying late fees.