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Gujarat VAT & CST

Gujarat VAT & CST Amendments w.e.f. 1st April 2011

[By Mr. Bharat V. Shah (Director), VNCA]

Consequent to Gujarat Budget 2011 proposals the following is the gist of important amendments to the VAT & CST Acts:

W.E.F. 1-4-2011, the rate of VAT on Sales of Tobacco of all types and Tobacco products such as Bidi, Cigarettes, Gutkha, Pan masala, snuff containing tobacco, etc. will be taxable at the rate of 22.5% VAT plus 2.5% Add. Tax. (Total 25% ) instead of the earlier rate of 20%.

W.E.F. 1-4-2011, as per the Central Budget’s amendment maximum 5% tax can be levied on sales of ‘Declared Goods’ (listed in Section 15 of the CST Act).  Earlier limit was 4%. Consequently, the Gujarat Govt. has amended section 7(1A)(a) & section 9(6)(a).  Hence, now 1% additional tax is to be levied on sales of Declared Goods i.e. (i) Coal including coke in all forms; (ii) all kinds of cotton; (iii) Cotton Fabrics, Cotton Yarn; ( iv) Crude Oil; (v) Aviation Turbine Fuel; (vii) Hides & Skins; (viii) Iron & Steel; (ix) Jute; (x) LPG for domestic use; (xi) Oil seeds etc.  In other words, sales of all declared goods will be taxable at the rate of 4% VAT + 1% Add. Tax.

Inter-State sales of Declared Goods without ‘C’ Form will be taxable at the rate of 5% CST.

Consequent to the above changes, the dealer making inter-state sales (OGS Sale ) of the “Declared Goods” is required to reduce 2% (Two percent) input tax credit which is admissible on taxable purchases of such goods within the state.

The aforesaid amendments pertaining to Declared Goods will be applicable after enactment of the Central finance bill.

W.E.F. 1-4-2011, the applicable rate of VAT on Sales of ‘Mobile Phones’ has been increased from 5% to 15% (12.5% VAT + 2.5% Add.Tax).  As a result,  inter-state sales of mobile phones against ‘C’ Form will be taxable @ 2% CST & without ‘C’ Form will be taxable @ 15% CST.

W.E.F. 01-04-2011, The state government has deleted the words “Car Telephone, Transportable Telephone and Cellular Telephone” from Entry no 20 for List of I.T. Products ((Notification:- (GHN-21)VAT-2009-SCH-II (45)(1)-TH Dt.01/08/2009, therefore the applicable rate of VAT on sales of  “Car Telephone, Transportable Telephone and Cellular Telephone” has been increased from 5% to 15% (12.5% VAT + 2.5% Add. Tax). As a result, inter-state sales against ‘C’ Form will be taxable @ 2% CST & without ‘C’ Form will be taxable @ 15% CST.

W.E.F. 01-04-2011, the state government has removed the exemption of tax on (1) Metro rail coaches and (2) Parts of Metro rail coaches when sold to any metro rail company.  Therefore these items will now be taxable @ 5% VAT (4% VAT + 1% Add. Tax.)

W.E.F. 01-04-2011, the Government of Gujarat hereby remits whole of the tax payable by a registered dealer on the sales of Oil Cakes and De-oiled Cakes of Cotton Seeds subject to the following conditions, namely:-

  1. The registered dealer shall not issue tax invoice for the sales of oil cakes and de-oiled cakes of cotton seeds.
  2. The registered dealer shall not charge tax from the purchases on the sales of oil cakes and de-oiled cakes.
  3. The registered dealer shall not be entitled to remission of tax on sales of oil cakes and de-oiled cakes of cotton seeds from the date of the contravention of any of the provisions of the Act or Rules made there under.

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