Gujarat Budget 2016-17–VAT Amendments

[By Shaleen Shah (Partner) with Kirit Rana (Manager-VAT), VNCA]

Gujarat Budget 2016-17 was passed by the State Assembly on 30-Mar-2016. The gist of VAT amendments enacted in the budget read with relevant notifications is as follows –

INCREASE IN TAX RATES W.E.F. 1-APR-2016:

1. New Entry No.49C in Sch-II: Luxury Cars & SUVs with price more than Rs.15 Lacs and Luxury Two-wheelers with price more than Rs.2.5 Lacs will be taxable @ 20% [incl. 2.5% Add.Tax]

2. New Entry No.55A in Sch-II: Pan masala will be taxable @ 25% [incl. 2.5% Add.Tax]

3. New Entry No.80A in Sch-II: Motor vehicles (except school buses, college buses, passenger buses and goods carrier trucks) sold to companies, firms HUFs, Societies, institutes, association of persons or bodies of individuals whether incorporated or not, clubs, trusts, Government departments, Government undertaking, Boards, Corporations, local self-Government bodies and artificial juridical person will be taxable @ 20% [incl. 2.5% Add.Tax]

AMENDMENT TO EXISTING EXEMPTIONS W.E.F. 1-APR-2016:

Hitherto, `Salt’ was fully exempt vide Entry 50 of Sch-I. ‘Pure sodium chloride’ was notified as ‘Industrial Input’ under Entry Entry 42A of Sch-II read with relevant notification and taxable @ 5% [incl. 1% Additional Tax.] Now with amendments to the ‘Industrial Inputs’ notification and Entry 50 of Sch-I w.e.f. 1-4-2016, the following will be taxable as `industrial inputs’ @ 5%:

(i) Pure Sodium Chloride

(ii) Salt used as raw material in manufacture of goods

`Salt’ other than above continues to be exempt provided the purchaser gives a declaration that the salt purchased by him shall not be used as `industrial input’.

NEW EXEMPTIONS W.E.F. 1-APR-2016: The following products will be fully exempt vide amendments to Exemption Notification u/s 5(2):

1. Sanitary Napkins & Adult Diapers will be fully exempt. Baby Diapers continue to be taxable @ 5% [incl. 1% Additional Tax]

2. Bamboo, whether whole or split and articles made of bamboo (except furniture).

3. Pedal rickshaws and cycle rickshaws

4. Mosquito net

5. Frozen Semen

REDUCTION IN TAX RATE W.E.F. 1-APR-2016:

Tax rate for `Ceramic Products’ is reduced to 5% [incl. 1% Add.Tax]

AMENDMENT IN ENTRY TAX W.E.F. 1-APR-2016:

With an aim to provide a level-playing field for traders and retailers in the state, entry tax is now levied on goods purchased through e-commerce portals. Sale of goods in Gujarat from outside the State under e