mvat audit
TRANSCRIPT
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Project - MVAT Audit
BY ANURADHA JOSHI
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Company Profile` India's largest central Air Conditioning company annual
turn over Rs 2900 crores,
` Network -29 offices,6 modern manufacturing facilities,
1200 dealers , 2800 employees.
` Establish leadership-commercial refrigeration
` Primary focus :
A)corporate marketB)commercial market
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Introduction of VAT
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Merits of VAT-
` Eliminates Multiple Tax
` Lowering of Tax Burden
` Fairness
` Tax transparency
` Higher tax revenue
` Uniformity
` Simpler
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Demerits of VAT
` Rate is not uniformed across the country
` It does not cover goods as well as services
` General rate of 12.5% is too high
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How VAT actually works?
` Sale price is made up of two elements -The selling price of the goods and
The tax on the sale.
` Tax payable to State Government.
` The tax payable on sales is to be calculated on theselling price.
` The tax paid on purchases supported by a, valid
tax invoice is generally available as set-off (input,
tax credit) while discharging the tax liability onsales.
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Case study
Company A buys iron ore and other consumables andmanufactures stainless steel utensils;Partnership firm
B buys the utensils in bulk from Company A and
polishes them; and sell to the End User. (The sale and
purchase figure shown in the example are excluding tax)
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Solution
Particulars Amount VAT 4%
Company A
Cost of iron are and consumables 50,000 2000
Sales of unpolished stainless steel utensils 1,50,000
Value added 98000
Company A is liable to pay VAT on
Rs.1,50,000/- @ 4%
6000
Less Set Off (2000)
Net VAT amount to pay with the Return
(Note: Tax invoice issued by Company A will
show sale price as Rs.1,50,000/- tax as
Rs.6,000/-. Therefore, the total invoice value
4000
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Particulars Amount VAT 4%
Partnership B
Purchases unpolished stainless steel utensils. 1,56,000
Sales polished stainless steel utensils 1,80,000
Value added 24000
Partnership B is liable to pay VAT on
Rs.1,80,000 at 4%
7,200
But can claim set off of tax paid on purchases (6,000)
Net VAT amount to pay with the Return 1200
End user
Purchases polished stainless steel utensils 1,87,200
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Particulars Amount (Rs.)
Suppliers of Company A 2,000
Company A 4,000
Partnership B 1,200
Total 7200
The State Government received the tax in stages.
The payments of tax were as follows:
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MVAT AUDITMVAT AUDIT
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Need of MVAT Audit
Maharashtra Value Added Tax Act 2002
Complicity in VAT calculation
The Role of Auditing and Auditors in MVAT-
AuditorEnsure about the Audit certificationEnsure about the Accounting policiesEnsure about the books of accounts
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Scope of MVAT Audit
Audit checks whether the self-declared taxand claim of input tax credit or refund arecorrect.
Act provides compulsory tax audit in case ofdealers specifying certain criteria.
If a dealer was having more than one
certificate of registration If a dealer was holding an entitlement
certificate
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Applicability of MVAT Audit Provisions
His turnover of sales or purchasesexceeds rupees Sixty lakhs in an year
He holds license in specified forms issuedunder various laws or rules formanufacturing, storing, distributing,
selling liquor, etc.
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Submission of Audit Report
When ?
How ?
Contents:
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Central State Tax
` Definition
` Objectives
Inter-state trade or commerce,
Trade happens outside a state
To provide for levy, collection and distribution of
taxes on sales of goods
` Levy and collections of tax underCST-
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OBSERVATIONS
` Complicated VAT structure
` Time consuming government formalities
` Unawareness about vat system creating
confusions to take benefits of vat system
` Beneficial for government as tax is collected atevery stage of stock movement
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LEARNINGS
` Overall culture in the corporate firms.
` Maharashtra value added tax audit and tax formalities.
` Understanding Auditors duties and responsibilities.
` Accounting on SAP for TDS and other value added tax
like MVAT and CST
` Filling up of form 704 for vat audit
` Collection of various forms of declarations
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Conclusion
` VAT system is better than old sales structureBecause
VAT system that avoids double taxation of
commodities
VAT has other advantages for both business and
government
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Conclusion
` Difference between VAT and CST
CST VAT
The tax is collected at
one stage of purchase or
sale of goods.
The tax burden would be
shared by all the dealers
from first to last.
The tax is levied at asingle point Retailers are not subjectto tax except for the
retail tax
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