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OBJECTIVES OF STUDIES

The system of Value Added Tax (VAT) has been implemented, in the State of
Maharashtra, w.e.f. 1st April, 2005. The study is being done

1. To gain knowledge about M-VAT.

2. To understand how auditing is done M-VAT.

3. To understand the advantages and disadvantages of M-VAT.


This project aims at giving a brief understanding about the M-VAT.

4. To understand the impact of M-VAT in India.

5. The main objective of this project report is to analyze and study about M-VAT.
The system of Value Added Tax (VAT) has been implemented, in the State of
Maharashtra, w.e.f. 1st April, 2005.

The following Acts have been repealed on introduction of VAT:

The Bombay Sales Tax Act, 1959, (BST)

The Maharashtra Sales Tax on the Transfer of Property in goods involved in the execution of
Works Contract (Re-enacted) Act, 1989.
The Maharashtra Sales Tax on the Transfer of the Right to use any goods for any Purpose Act,
(Lease Tax) and

The Bombay Sales of Motor Spirit Taxation Act, 1958.

Thus all transactions of purchase and sales of goods, within the State of Maharashtra, which
used to be covered under the above Acts, till 31st March 2005, will now be governed by the
Maharashtra Value Added Tax Act, 2002, (MVAT), as amended by Maharashtra Value Added
Tax Amendment Bill,2005.
There will be only one tax; i.e., VAT no separate Purchase Tax, Turnover Tax, Resale Tax,
Surcharge, Works Contract Tax, and Lease Tax etc. No Concessional Forms such as Form 14,
14A, 14B, 13A and BC Form etc.,

INTRODUCTION

1. Short title, extent and commencement:-

(1) This Act may be called the Maharashtra Value Added Tax Act, 2002.

(2) It extends to the whole of the State of Maharashtra.

(3) It shall come into force on the 1st April, 2005.

2. Definitions:-

In this Act, unless the context otherwise requires-

(1) agriculture, with all its grammatical variations and cognate expressions,
includes floriculture, horticulture, the raising of crops, grass or garden
produce, and also grazing; but does not include dairy farming, poultry
farming, stock breeding, the mere cutting of wood or grass, gathering of fruit,
raising of man-made forests or rearing of seedlings or plants;

Explanation.

For the purpose of this clause,-

(i) the activity of raising of man-made forest or rearing of seedlings or plants


shall be deemed to be business;

(ii) any transaction of sale or purchase of capital assets pertaining to such


service, trade, commerce, manufacture, adventure or concern shall be
deemed to be a transaction comprised in business;
(iii) sale or purchase of any goods, the price of which would be credited or, as
the case may be, debited to the profit and loss account of the business
under the double entry system of accounting shall be deemed to be
transactions comprised in business;

(iv) any transaction in connection with the commencement or closure of


business shall be deemed to be a transaction comprised in business;

(2) capital asset shall have the same meaning as assigned to it, from time to
time, in the Income Tax Act, 1961 (43 of 1961), but the said expression shall
not include jewellery held for personal use or property not connected with the
business;

(3) Commissioner means the person appointed to be the Commissioner of Sales


Tax for the purposes of this Act;

(4) to cultivate personally, with its grammatical variations and cognate


expressions, means to carry on any agricultural operation on ones own
account,-

(a) by ones own labour, or

(b) by the labour of ones own family, or

(c) by servants on wages payable in cash or kind (but not in crop share), or
by hired labour under ones personal supervision or the personal
supervision of any member of ones family.
TAXES PAYABLE -

Subject to the provisions of this Act and rules, there shall be paid by every dealer
or, as the case may be, every person, who is liable to pay tax under this Act, the tax or
taxes liable in accordance with the provisions of this Act and Rules.

Tax not leviable on certain goods

Subject to the other provisions of this Act, and the conditions or exceptions, if any, set
out against each of the goods specified in column (3) of Schedule A, no tax shall be
payable on the sales of any goods specified in column (2) of that schedule.

Rate of tax on packing materials

Where any goods are sold and such goods are packed in any material, the tax shall
be leviable under section 6 on the sales of such packing material, whether such
materials are separately charged for or not, at the same rate of tax, if any, at which tax
is payable on the sales of the goods so packed.