Wednesday, April 6, 2016

New composition scheme of Tax of 5% under Delhi VAT

A new composition scheme has been notified under the Delhi VAT Act Vide Notification No. F.3(29)/Fin(Rev-I) 2015-2016/dsvi/93 dated 18.3.2016 with effect from 1.4.2016 for every registered dealer -

whose turnover during the preceding year as well as expected turnover during current year does not exceed Rs.50 lacs; and

who is not making any sales other than that of ready to eat foods and non-alcoholic beverages including cooked food, snacks, sweets, savouries, juices, aerated drinks, tea & coffee etc. and served in or catered indoors or outdoors by hotels, restaurants, sweet-stalls, sweet shops, clubs, caterers & any other eating houses.
Such dealer may elect for the new composition scheme and pay tax @ 5% of the entire turnover. The electing registered dealer shall comply with the conditions and restrictions specified in this notification, such as, -


He shall not be eligible for making purchases from or procuring goods from or making sales to or making supplies to any place outside Delhi;

He shall not be eligible for making purchases from a person who is not registered under the DVAT Act except in the case of goods specified in the First Schedule;

He shall not be eligible to claim tax credit under section 9 of the Act;

He shall not calculate his net tax under section 11 of the Act;

He shall not collect any amount by way of tax under the Act;

He shall not be entitled to issue 'Tax Invoices'.
A registered dealer, who is paying tax under section 3 of the Act (as a normal dealer), can opt for payment of tax under this scheme by filing an application in Form RH-01 within a period of 30 days from the first day of the year with effect from which composition is opted. For the year 2016-17, application for composition under this Scheme could be filed up to 30th April 2016.
A dealer applying for a fresh registration can also opt for this scheme by filing application in Form RH 01 along with his registration application in Form DVAT 04.
As per second proviso to Section 16(1) of the DVAT Act (inserted w.e.f. 1.4.2013), where a separate composition scheme has been notified u/s 16(12), those dealers cannot elect for general composition u/s 16(1) of 1%. Therefore, where any dealer, covered by this notification, has already opted for composition scheme u/s 16(1) of the Act, such dealer shall mandatorily withdraw from the composition scheme w.e.f. 1.4.2016 by filing application in Form DVAT-03 upto 30.4.2016. However, such dealer can opt for the new composition scheme of 5% specified through this notification.

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