VAT Amnesty Scheme – a benefit for traders & merchants:
Many traders & merchants got affected by riots in India & properties of shopkeepers got damaged in the riots so this scheme came as a benefit for those traders who got affected, they were given an extension for payment of tax & no interest was charged on extended time period.
The Government in India has come up with VAT amnesty scheme for the traders & merchants so that they cannot evade sales tax. This is the “all carrot” policy that will target around 1.20 lac merchants & traders. Now after the introduction of VAT amnesty scheme the traders & the merchants will be held responsible to pay their undeclared earnings, unpaid tax, penalties & interests that were due. Government will be giving some benefits to the traders which include payment of just the tax amount in the case of tax disputes before 1 April 2005 that would make the dealer eligible for a full waiver of the interest & the penalty amount. This scheme came into existence to motivate registered as well as unregistered dealers to purposely disclose their outstanding tax dues.
Sales Tax revenue amounting to approximately Rs 40,909 crores has not been realized, so this scheme may prove to be beneficial for the country to broaden the tax net & it will help in improving revenues of the country. By implementing VAT amnesty scheme the traders will have to regularize their undeclared working capital. Introduction of VAT amnesty scheme will improve the growth of the economy & bring improvement in the GDP of the country. Many other countries have also initiated this scheme to increase their tax revenues. This kind of scheme is a great barometer to discourage wrong traits that are being followed by majority of people in almost every country which includes money laundering or getting involved in hawala transactions which harms the economy of the country.
This VAT amnesty scheme is covered under Maharashtra VAT Act which was announced in the budget & is relevant for the dealer who has filed an appeal for the recovery of disputed dues that is stayed by appellate authority. It is relevant for the dealer who withdraws this appeal & most importantly amnesty must not be available for tax dues. This scheme is suggested for motivating people not inducted with the professional tax department which is beneficial for them.
There were numerous traders in the state of Maharashtra that were assessed with collecting bogus bills. These bills are made without the actual purchase or sale of goods from bogus dealers which in general term called as hawala dealers. This scheme is for traders who have VAT dues of about Rs 1crore or less. This VAT amnesty scheme was basically introduced to get hold of the VAT defaulters & this is somehow an effective scheme.
Few Benefits under the scheme:
1. Amount of penalty & interest over & above interest accrued up to the date of order under the VAT Amnesty Scheme gets waived off provided the applicant has deposited the whole amount of tax pending on the date of filing of application & also he/she submits the proof of withdrawal of case pending in the court. This benefit is applicable only in the case of category of demand created before 31st March, 2010 & is not connected with the misuse or evasion of tax or declaration forms or certificates.
2. The rest of the amount of interest over & above interest accrued up to the date of order under the VAT Amnesty Scheme gets waived off provided the following conditions are complied with i.e. the applicant has deposited the whole amount of tax, along with 25% of the outstanding penalty according to Demand & Collection Register on the date of filing of application by the applicant & also that the applicant shows a proof of withdrawal of case pending in the court. This benefit is applicable only in the case of category of demand created on or before 31st March, 2010 & has connection with evasion of tax or misuse of declaration form(s) or certificate(s).
3. This benefit is for category of demand comprising purely of interest & created on or before 31st March, 2010 where the remaining amount of interest over & above the interest accrued up to the date of order under the scheme provided the following conditions get satisfied i.e. the applicant has deposited 10% of the outstanding amount of interest & proof of withdrawal of case pending in court.
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