I think the information will be helpful for all members.

Zero rated sale is a sale for which no tax is levied but the tax paid on local purchase is refunded to the dealer who effected that sale. The Value Added Tax Act specifies the zero-rated sales as:
(a) Export Section 5(1)
(b) Sale in the course of export [5 (3) of CST Act, 1956] i.e. sale to exporters
(c) Sale to International organizations
(d) Sale to SEZ

Regarding a query on provision for compounding the system of tax under VAT, it was clarified that the same is available and the options are:

1. The Act provides tax not exceeding 1% as notified by Government on the turnover for the dealers who effects second and subsequent sale in the State and whose total turnover for a year is less than Rs. 50 lakh. Government has notified this rate as 0.5%.

2. The work contractors may opt to pay at compounded rate of 2% (civil), 4% (others) instead of paying tax at the rate prescribed for the goods involved.

3. The hotels, restaurants and sweet stalls may opt to pay tax at compounded rate prescribed in the Act at slab rates where total turnover is not less than Rs.10 lakh but not more than Rs. 50 lakh.

However, no input tax credit is allowed to those dealers who opt for compounded system.

Mr. Rakesh Joshi

Joshi Enterprise

Manager, Joshi Enterprise
Dispur, India

Free Member, Joined :02/02/2007
No of Topics Posted : 122
Reply/Comments : 16