Jun 092013
 

ALL ABOUT TNVAT AUDIT

APPLICABILITY

Every registered dealer whose turnover including zero-rate sale and sale in the course of inter-state trade or commerce as specified in Section 3 of the Central Sales Tax Act, 1956 in a year, exceeds one crore rupees shall get his accounts audited by an Accountant and submit the report to the Assessing authority within the stipulated time.

EXEMPTIONS

This audit requirement is not applicable to the following :-

(i)                 Departments of Central & State Governments,

(ii)               Local Authorities

(iii)             The railway administration as defined under the Railways Act, 1989

(iv)             Tamilnadu State Road Transport Corporations and

(v)               Similar such dealers, as may be notified by the Government.

AUDIT REPORT

The Form of audit report shall be Form – WW. This form shall be prepared,signed and certified by Accountant , in duplicate , and shall be submitted to the Assessing Authority.

TIME LIMIT FOR AUDIT

The last date for filing TNVAT Audit Report is 9 month from the end of the year. (ie) 31st December every year. (Previously, the time limit for submission of audit report was 7 months from the end of the year). (ie.,) For the year ended 31st March 2013, the Report shall be submitted on or before 31st of October 2013.

WHO CAN DO THE AUDIT

A Chartered Accountant as defined in the Chartered Accountants Act, 1949 or a Cost Accountant as defined in the Cost and Works Accountants Act, 1959  can conduct the audit.

WHAT ARE THE ACCOUNTS/RECORDS TO BE MAINTAINED AND AUDITED

v     Purchase Account

v     Sales/Stock Transfer account

v     Production cum stock account

v     Stock Register

v     Input tax adjustment account showing opening balance, claim during the period, output tax, adjustments,reversals,etc.,

v     Capital Goods input tax adjustment account

v     Record of sales through agents

v     Record of purchases/goods received for sale from principal

v     Invoices

v     Certificate of Industrial Inputs

v     Register of Certificates Issued

v     Register of Certificates received

v     Register of delivery notes

v     Cash book

v     Bank book

v     General Ledger

 

HOW TO CALCULATE THE TURNOVER

Turnover for VAT audit includes .

–                      Taxable Turnover

–                      Zero rated sales

–                      Exempted Sales

–                      Inter state sales

–                      Purchases turnover assessable to tax u/s. 12 of TNVAT Act (purchases from unregistered dealers)

–                      Sale of Capital Goods (Example-Sale of Car by the assessee)

–                      Value of Stock Transfer (outward)

WHAT HAPPENS IF ANY DEALER FAILS TO SUBMIT AUDIT REPORT

If any dealer fails to get his accounts audited and submit a report of such audit within the prescribed period, the registered dealer will be required to pay a sum of Rs. 10000/- as penalty in addition to any tax payable, in respect of the said period. The assessing authority also has got the powers under the act to compel the dealer to submit the audit report.

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Comments

comments

  36 Responses to “ALL ABOUT TNVAT AUDIT”

  1. Dear Sir,

    We are dealers in building materials and availing Input Tax credit which is being set off against output VAT payable every month and till date there is no sales tax payble.

    Is the VAT tax audit applicable? Kindly let me know.

    Warm regards
    Jayakrishnan.K
    goldenjayan@gmail.com

    • Dear Mr. Jayakrishnan,

      The Applicability of VAT Audit is based on the Turnover of the Assessee and not on the basis of Tax Paid/Payable.

      In your case, if your turnover exceeds Rs.1 Crore, You will be covered under TNVAT Audit.

      – Sridhar

  2. Sir,

    I am a practicing accountant, I would like to know about the applicability of TNVAT AUDIT. You had mentioned that Every registered dealer whose turnover including zero-rate sale and sale in the course of inter-state trade or commerce as specified in Section 3 of the Central Sales Tax Act, 1956. I think the VAT Audit will be applicable to any dealer ‘s turnover both Local & CST, whether it is taxable or exempted. Kindly clarify this point at your earliest convenience.

    Thanking You,

    • Yes. Turnover includes all types of turnover. (i.e.,) vat, cst , whether exempt or zero rated.

      We have mentioned what is included in Turnover in our post itself

  3. we are dealing with Exempted goods – Asafotida – commodity code 718 – purchased locally, and sales also locally – in vat audit forms (WW) where have to fill exempted purchase & sales, please clarify – No ITC & No Tax Liability . . . .Krishnan

    • With regard to Exempt Sales, the same shall be filled in Part B Item No xii to xv as applicable

      With regard to Purchases, the same shall be filled in Part B Item No 13.
      The same can be filled either in Sl No a(ii) with VAT Paid as Nil (or) in Sl No 13(e) Others specifically mentioning the same as Exempted Purchases.

  4. Sir,

    U/s 12 purchase we should pay tax in advance or we adjust with our Input credit?

    • Sir,
      Tax payments in respect of sec 12 purchases cannot be adjusted against ITC. U need to pay the tax by cheque/ online payment at the time of filing return. Such payment us eligible for ITC in the subsequent month.

      • Dear Sir,

        Your clarifications are excellent.

        Re Purchase tax u/s 12, payment of royalty for trade Mark rights of an Unregistered dealer whether attracts Purchase tax ?
        I feel there is no purchase transaction is involved & also it is not used for purposes in Cl a to d ,Please clarify.

  5. Sir,

    Does Turnover include VAT and cst component also for TN Vat Audit limit?
    For eg:
    Sales – Rs.100
    Vat 5% – R.5
    Total – Rs.105
    Should I take Rs.100 or 105 for the one crore limit.

    Thanks .

    • Madam,

      Explanation IV to Section 2(41) of the TNVAT act clearly specifies that ” Any amount, charged by a dealer by way of tax seperately without including the same in the price of the goods sold, shall not be included in the turnover”.

      In view of the above, tax amount, if shown seperately in the invoice shall not be taken as Turnover for Audit Limit.

      Hope we have clarified your query.

  6. Excellent commentary with clarity. This a great help for all CAs

  7. Sir,
    Taxable turnover under TNVAT Act means, Taxable (VAT) sales with in Tamilnadu + Taxable (CST) sales in interstate(other than TN) and IF VAT Taxable Sales Rs.100000 (Total Sales Rs. 200000) and CST Taxable Sales Rs. 50000, Total taxable turnover Rs.150000 or Rs.100000 Pls clarify.. and Input Credit Available based on Rs. 150000 or Rs. 100000 Thank you……

    • Taxable turnover under TNVAT means Vattable Sales only. CST sales are excluded.

      • Dear sir, we need to take total turnover only and not taxable turnvover for the purpose of ascertaining the vat audit requirement.

  8. Sir,

    Is VAT Audit applicable on Production of Salt.

    • Dear Mr. Nishant Bafna,

      The sale of salt is exempt from TNVAT under Section 15 of the TNVAT Act and the same is part of The Fourth Schedule – Part B , Sl No 69 (commodity code 769).

      Section 63A of the TNVAT which provides for TNVAT Audit applicability provides that every registered dealer whose total turnover including zero rate sale and sale in the course of inter-state trade (CST Sales) , exceeds Rs. One Crore, shall get his accounts audited and submit a report as prescribed.

      In my view, total turnover includes exempt, zero rated sales also and hence it will be subject to TNVAT Audit.

  9. 1. Actually my client is bags shop he purchases some goods ( bags) from unregistered dealer (without tax) and he sold the bags as sales

    2. need to show in return in sec 12 and i need to pay tax for that in online can i take the input for next month
    while filing return it is not carry forward to next to month through ITC draft payment annexure ( purchase – 24156 @ 14.5% and sales 38626 @ 5% i will get ITC of 1570 to next month

    IF i show URD purchase 22910 @ 5% = 1145 should be paid. Then next month shall i take credit of both ITC as per registered purchase – 1570+ URD 1145.

  10. Sir, my client’s total sales is Rs. 94 lakhs and total purchases from the registered dealers in Tamilnadu is Rs. 105 lakhs. Whether this account is liable for VAT audit?

    • If the turnover exceeds Rs. 1 Crore only TNVAT Audit is applicable. In your case , in our opinion, since the turnover does not exceed Rs. 1 Crore, VAT Audit will not be applicable

  11. Sir, according to sec 2(41) of the VAT Act, Turnover means the aggregate amount for which goods are bought or sold. If it is so, how can we ignore the total purchase which is more than one crore?

    • Dear Sir,

      In my opinion, Section 63A which is the Audit provision uses the words “Total turnover” including zero rated sales and sales in the course of interstate trade (CST Sales)
      Total turnover is defined under Section 2(40) of the TNVAT Act. wherein it is specified that “total turnover” means the aggregate turnover in all goods of a dealer at all places of business in the state, whether or not, the whole or any portion of the turnover is liable to tax.

      In view of the above, i am of the opinion that the turnover will be the aggregate of taxable,exempt,zero rated and CST Sales and Purchases from unregistered dealer which is chargeable u/s. 12 of the TNVAT ACt.

  12. Should it be certified only by chartered accountant in practice only. Can a chartered accountant not in practice sign the report.

    Thanks in Advance

    • The audit under the TNVAT Act,2006 being an attest function, as per the ICAI Council resolution, member not in practice or member in part-time practice cannot perform an audit under the TNVAT Act, 2006.

  13. Sir,

    We are 100% export company. There is no local sale or interstate sale. We are filing VAT(TN) return.
    Do we need to file auditors report in form ww for the export sale. We received a notice from tn vat for filing the same and pay rs. 10,000/- as penalty.

    Can you pls explain how to reply with them?

    • Dear Sir,
      The TUrnover for the purposes of TNVAT Audit Includes both zero rated sales & Inter state sales.
      Hence, in our opinion, prima facie, in your case, you need to file the Form WW.
      regards
      -Sridhar

  14. Dear Sir
    We have purchase some capital goods (like Cement, Bricks, Sand etc) for civil construction work from unregistered dealer, is we have to pay tax on this.
    regards
    Amit

  15. I have sold rice milling machinery, spare parts and components to interstate @ 5% without C form and the tax paid to Govt. I am filing monthly return Form 1 CST act commodity code 2025, now I received the notice from Sales Tax Department saying that 2025 commodity code sold @ 5% is applicable for inside the State but for interstate sales taxable @ 14.5% instead of 5% under section 2 (41).

    Our sales at inside state @ 5% and the same tax we collected 5% for interstate sales without C form with 2% with C form. Now, What I should do? for filing objection.

    Regards

    S.R.DESIGAN

    • Dear sir,

      The relevant Section is section 2(11) which describes the capital goods, which should be sold within the state to be able to be charged @5% with commodity code 2025.

      In your case, the same cannot be considered as capital goods since the same is sold out of state, which is against the definition u/s. 2(11). In such a case, the rate of tax to be charged on Interstate sale is the local rate which will be 14.5% (commodity code 301)only.

  16. Dear Sir,

    Can we file TNVAT annual returns if exempted turnover exceeds 1 crore rupees. ( Exempted sales in the sense Curiled Coir Products )

    Thanks in advance

    Venkatesh.

  17. Dear sir

    Kindly send reply letter format to Vat Depart ment for not applicable for Annual VAT Audit

  18. How to prepare TNVAT Audit for turnover 1Crore Dealer?

  19. Sir,
    Did you notice that the exempted sales to unregistered dealer given in base form may added in Taxable Turnover in Acknowledgement sheet?. I request your clarifications in this regard. [TNVAT New Portal]

    Thanks & Regards
    Palanivel Arumugam
    9443459290

  20. Sir, Is interest still payable under TNVAT if the dealer is having no tax liability after using the Input tax credit and the return is filed late…?

    Also confirm whether Interest rate is only 1.25% in case of tax payable and return is filed late….?

    • If there is no Tax liability, then the question of payment of interest does not arise. However a compounding fee of Rs.2000/- may be levied by the CTO at his discretion.

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