Important Amendments in TNVAT Act

1.     A proviso has been inserted to Sec.19(2) of the TNVAT Act, 2006 by Tamil Nadu Value Added Tax (5^th Amendment) Act, 2013 (Act No.28 of 2013).  The effect of the said proviso is that in respect of inter-state sales of goods that are purchased within the State from a registered dealer and sold in the course of inter-state trade or commerce falling u/s.8(1) of the CST Act, 1956), input tax credit shall be allowed in excess of 3% of tax.  In other words, if goods have been purchased locally within the State on payment of tax @5% and sold on inter-state sale basis and such sale is supported by “C” declaration forms, then Input Tax credit shall be allowed to the extent of 2% only.  Reversal of ITC has to be made on such sales to the extent of 3%. 

For example:

Purchase value of input material is                                 Rs.  60.00                 

     ITC at 5%                                                                      Rs.    3.00

            (Finished) CST Sale of output goods is                         Rs.100.00 

     ITC to be reversed                                                       Rs.    1.80

     (3% on Rs.60/-).

                        Eligible ITC that can be adjusted (Rs.3.00 – Rs.1.80) =Rs.   1.20

                            for other local sales or CST sales

i) If the output goods is hosiery then the CST rate of tax is 1%.  So on the sale value of Rs.100/-, tax to be collected is Re.1/-.  This tax amount of Re.1 can be adjusted from the eligible ITC of Rs.1.20 and the balance 0.20 Ps can be adjusted for other liabilities

ii) For other goods the rate of CST is @ 2% then, on CST sales value of Rs.100/-, Rs.2/- has to be collected and 0.80 Ps ( i.e Rs.2.00 – Rs.1.20 = Rs.0.80 Ps) has to be paid.

iii) If the goods purchased are used in manufacturing of both local and CST sales then, proportimate reversal has to be made.

2.  Sec.19(4) of the TNVAT Act, 2006 has been amended and ITC shall be allowed in excess of 5% in respect of stock transfer of goods.  In other words the rate of ITC to be reversed has been increased from 3% to 5%.

3.    The time limit for filing of Form WW has been extended from seven month to nine months from the end of the assessment year vide G.O.Ms. No.136 dt.31.10.2013.  In other words Form WW has to be filed on or before the 31^st of December.

4.    A new annexure, Annexure V has been added to the monthly Form I return to give details of the closing stock inventory if Input Tax Credit is carried forward to the next month.

5.     Rate of tax in respect of sale of alcoholic liquors has been enhanced.

6.    Sixth schedule to the TNVAT Act, 2006 has been amended and the following two entries have been added to the sixth schedule and hence transit pass is necessary for the following two goods also:

a.    Vegetable oils including refined vegetable oils

b.    Iron and steel as specified in clause (iv) of Sec.14 of the CST Act, 1956