Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Monday, April 18, 2016

DVAT Composition Scheme for Small Food Dealers (Having Turnover not Exceeding Rs.50,00,000/-)

DVAT has introduced a composition scheme for small dealers whose turnover does not exceed Rs fifty lakh in preceding financial year and expected turnover of current year does not exceed Rs fifty lakh to minimize tax burden provided that the condition of turnover during the preceding year shall not apply to a dealer who commences his business during the current year.

Applicability w.e.f. : 01st April 2016

Eligibility to pay tax under this Scheme:

·         The dealer must be registered
·         The turnover of preceding financial year as well as current financial year does not exceed 50 lakh.
·         The dealer is not making sales of any goods other than that of ready to eat foods and non alcoholic beverages including cooked food, snacks, sweets, savouries, juices, aerated drinks, tea and coffee etc whether these are provided as indoor service or outdoor service by hotels/ restaurants/ sweet stalls/ sweet shops/ club/ caterers or any other eating houses.
Composition Amount:       5% of entire Turnover

Rate of Tax:

The tax will be paid at the rate specified in section 4 of the Act on the value of opening stock held on first day of financial year from which he opts for the scheme.
He shall furnish the detail of such opening stock in form RH 02 with proof of payment of due tax in form D VAT 20 with his application in form RH 01.

 In Case dealers who opts this Composition Scheme they shall not be entitled for :


a)      Purchasing from or sale to any goods outside Delhi.
b)      For making a purchase from unregistered dealer except in case of goods specified in First schedule.
c)       For Booking tax credit under section 9 of the Act and calculating his tax under section 11 of the Act.
d)      For collecting any amount by way of tax under the Act and for issuing of “Tax invoices”.
Such dealer is liable to Retain all tax invoices and retail invoices of purchase made by him and retail invoices issued by him in respect of sales made by him as required by section 48.
 Other Major Points for consideration before opting for Composition Scheme:
1.       Once a dealer has opted to pay tax under this scheme, he shall be liable to pay tax under this scheme for the following year also provided he can opt out  from this scheme subject to :    
a)      Condition specified under section 20 of the act and
b)      Furnishing of intimation regarding withdrawl  from this scheme within 30 days from the end of financial year in form RH 03.
Once the dealer opts out from this scheme, he can claim credit of tax paid on opening stock held by him on first day of said following year.
2.       A dealer who apply for a fresh registration can opt for this scheme by filling application in form RH 01 along with his registration application in form D VAT 04
3.       A dealer who is paying tax under section 3 of the Act can also opt for this scheme by filling application in form RH 01 within 30 days from the 1st day of the year for which he wants to opt for this scheme.
4.       The dealers who are presently covered in general composition scheme as per sub section 1 to 11 of section 16 and they are also covered in the class of dealers prescribed in this scheme has to mandatorily withdraw from existing scheme by filing form DVAT-03 within a period from 1st April 2016 to 30th April 2016.These dealers can opt for the new scheme as per above procedure but it is not mandatory, If these classes of dealers are not interested in composition scheme can file returns as per normal procedure
5.       The Tax period will be quarterly unless otherwise prescribed by commissioner for a dealer or class of a dealer.
6.       The tax paid by dealer shall not be adjusted at any stage against the liability of dealers to pay tax under section 3 of the act for a period other than the period for which dealer is liable to pay tax under this scheme.
7.       If turnover exceeds Rs. 50,00,000 at any time during the financial year:
·         He shall be liable to pay tax under section 3 of the Act 
·         He shall be liable to furnish intimation in form RH 03 within 7 days from which turnover exceeds Rs. 50,00,000
·         He shall be entitled to claim credit of Input Tax paid on Opening  Stock held by him in Delhi on such day
8.       A dealer who has defaulted to pay tax under this scheme for two consecutive period,
·         Shall be liable to pay tax under section 3 and cease to pay tax under this scheme immediately from the 1st day of latter tax period from the period for which he has committed default.
·         He shall be liable to furnish intimation in form RH 03 within 7 days after the end of due dates specified.
·         He shall be entitled to claim credit of Input Tax paid on Opening  Stock held by him in Delhi on such day
9.       All the provision which are not contrary to this scheme shall apply to every dealer who is opting to this scheme.
10.   In case of failure to comply with the condition mentioned in the scheme or at a later stage is found that he was not eligible for the scheme, all the provision of the Act including the liability to pay tax under section 3 along with interest for delay shall apply mutatis mutandi as if he was not covered under the scheme.

Contributed By CA Shalu Gupta from Sandeep Ahuja & Co

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