Delhi Value Added Tax - Part 10 - Transitional Provisions
November, 01st 2010
This part tells you what you can and must do when transitioning from the current regime to DVAT.
Registration During Transition
If you are registered under Delhi Sales Tax Act, Delhi Sales Tax on Works Contract Act, or Delhi Sales Tax on Right to Use Goods Act , you will be automatically migrated to DVAT as a registered dealer with effect from April 1, 2005. However, if you are not required to be registered under DVAT (e.g., you do not make inter-state sales, and your turnover for the financial year ending March 31, 2005 does not exceeds Rs 5 lakhs), and you do not wish to be registered for DVAT, you should notify the Commissioner of your intentions within two weeks of this automatic transition.
On the other hand, if you do not qualify for automatic registration and you wish to be registered for DVAT, you can apply voluntarily for registration within one month of commencement of DVAT.
Transitional Credit on Opening Stock Held on April 1, 2005
If you are registered for DVAT (whether automatically or through a separate application), you will be entitled to claim a credit for the tax already paid under the DST Act on your opening stock held in Delhi on April 1, 2005.
The credit will be available for:
Raw materials and other goods for manufacturing; and
You may claim the transitional credit for your opening stock if -
The opening stock is in Delhi on the date of commencement of the DVAT Act;
The goods were bought at any time after April 1, 2004; and
You have sale invoices issued by a dealer registered under the DST Act in respect of purchases of the goods.
How to Go About It
If you wish to claim credit on your transitional opening stock, you must send us a statement in Form DVAT-18 along with a return that you file after being registered. This return must reach us on or before July 31, 2005.
If your claim of credit is more than Rs 1 lakh, you must get a chartered accountant to certify your claim being true and correct.
Restriction on the Credit
Please note that you will not be allowed to claim any credit for -
(a) finished goods or capital goods; (b) any goods that were taxable at last point under the DST Act 1975; or (c) opening stock which is held outside Delhi on April 1, 2005.
How Much Transitional Stock Credit Can You Claim?
If you hold sale invoices for the opening stock, issued by a person who was registered under the Delhi Sales Tax Act, 1975 and which separately indicates the amount of DST paid on the goods then you may claim a credit of the amount of tax disclosed on the sale invoices.
But if the DST amount has not been separately indicated on the sale invoice, you will only be entitled to a notional credit calculated by applying this formula:
F x P x 75%
Where F=the tax fraction, r/(r+100) [where 'r' is the rate of tax under Delhi Sales Tax,1975 applicable as on March 31, 2005 to the opening stock]
P=the price paid for opening stock.
The following example in the box illustrates the calculation of the tax credit for the opening stock, using this formula:
Assume that the price paid on the opening stock held by Dealer PQR was Rs 1,100 and that the rate of tax on the said goods on March 31, 2005 was 10% under the DST Act.
Rate of Tax 'r' =10%
Hence the Tax Fraction 'F' = (10/110)
Price paid for the stock 'P' = 1100 As per the formula, F x P x 75% = (10/110 x 1,100 x 75%) = 75