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VALUE ADDED TAXc

1.1 INTRODUCTION

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1.2 WHY VAT IS PREFERRED OVER SALES TAX?
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WHO GAINS?
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WHAT¶LL BE THE TAX BURDEN?
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1.3 WHO PAYS?
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The transaction chain under VAT assuming that a profit of Rs 10 is retained during each
sale.

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1.4 States Welcoming VAT in India


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1.5 WHICH GOODS WILL BE TAXABLE UNDER VAT?
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TERMS COVERED IN INDIAN VAT

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1.6 DISTRIBUTION EFFECTS OF VAT
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1.8 ADVANTAGES OF VAT
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c c #c %c 'c "c c &c *$#%c )c #%c c  'c c  c 'c
%c c#cc$ 'c
2.c Adjustment of tax paid on purchased goodsc%c'ccc'c&c%cc
'c $  $%c%c*$#%c)c%$%cc'c&c)#cc'c $  $%c
%c7$ 'c%$cc %#cc$ 'c%c$c'c)c$  $%cc#%c
"cc c c$ 'c %c
3.c Further such adjustmentc  c 'c $ '%c %c *$#%c %%c c 'c $c  c &c
'c c )#c "c *$#%c c 'c $ 'c  c
7c *$#%c c 'c 'c
c c  $%c c c c $c $ 'c %c & c c c  c &c %c c

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc1c
c
%c $  $%c $c  c 'c $c c #c c %c %#c 7##c c
c#cc&!%c%cc $%c*$#%c)c%)#c
4.c Transparencyc'c&c'cc#%cc'c ccc'c%cc#cc$ 'cc
cc'cc) $c'c$c c&c*' 'c'c%c'c$ %ccc
,*cc'c$)2$cc(c'c"cc'c$c c&c*$#%c)c,*cc
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5.c Fair and Equitablec"c%$ c'c$ c&cc c'ccc'c$ c
%c c)c,c*'#c#c'c&c
6.c Procedure of simplificationc  %$c #c c #c  c $c c  c &c
$'c % #c %c c c # %c $%c 'c "c c c c c
5cc  c)*c'c&cc%c'c&c ## c
7.c Minimize the Discretionc'c"cccc5c'c% c*'c'c
c   c c 'c c c c %c #,c ;c &#c 'c *$#%c )c c
% c #%c c 'c c  c #c #c #c  c $c ! #c  c
$c#cc c&cccc c&ccc c c&cc7$ 'cc
*$#%c)c c c##c'c'c
8.c Computerizationc 'c "c c $5c *' 'c *$#%c  $c c 'c &c
%c )c c & c c (c c #c $)c  c c c  c c
 $c c$c*$#%c)c2$%ccc*$#%c c'c&c #c%#c c##c
'c 'c *' 'c c c $ 'c c c  c c 'c c  c
c *' 'c *$#%c c c c  c #c $5c *$#%c ,c 'c &c
%cc  c%cc

cccccccccc c c
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1.9 DISADVANTAGES OF VAT

'cc%%c*' 'c'c)c% %cc  c*'c'c"#$c%%%c&cKcc


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1) VAT is regressive.

(cc #%c'c'c&ccc cc)$%c ##c%#cc'cc c


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'c$c $##c cccc# c% cc% c&c*'ccc
c*c)c c$%c'c*#%c%ccA$c 'c'*c'cc&c
c#%ccc%cc'c c c c&c ccc% cc cc
;$'c 'c c *c c % c c c $c c %$ c'c c  c &c c 'c
)c %c c A$c *'c c #c c  c  c &c 'c )c %$ %c (c c c "c
 c %c ,c c c c )c #c c c #*c c  c &c c #c
c $ 'cc %c #'c%c % c(c %%c c##*c ccc c&cc #$&$c
c#'$'c'c c c)#c c%c%cc$c cc)c
*c c%#)c #  cc)#c %##cc $#cc"c%c*' 'c,c
# c&#cc'cc c $c%$cc
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2) VAT is too difficult to operate from the position of both the administration and businesscc
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(a) The administration
(cc c$%c'c"c# cc #c)$%cc&c%c*ccc*'c
c 'c *'c "c *c %$ %c c  c c   c *c 'c #c %c
#  c  c 'c $c % c &c c %c c %c  'c  c 'c $c
% c&c $ 'c c $c %$c $ 'c &c %c & c %$c # %c )c "c '%c c
*c c $ $c c *##c c c % c &c )c %c c %c  %$c 'c
#%c%c c c$$c% c&cc'c"c*$#%c# c'cc
$ $c &c )c %c %c  c 'c % c &c c ')c #c 'c
#c$%c  c'c'%c#$%c'ccc
(c%%c'c)#c cc$)c c#c% c&c#c& %c#c
c  $ccc#c&c(c#c c%$ c c'c$)c c c$%c ##cc)c

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc<c
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#%c %c $c %c  $c *'c *' 'c 'c )$c c 'c c %cc
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(b) Business
(cc$c'c'c"cc ## %c cc#c$)c c c'c$%cc c c c
&cc#cc#c&Lcc'c #c##c c'c #&c c'c&c%c'c%c
c c &c  %c  c &#c c $ c %%$ c c #,#c c c $cc
*ccc c#,%c'c)$c#%c $ c*'c %)#c%c
)#c c c $)c  c #*c  #$%c 'c 9#c ($ c  c %c 'c ( c &c
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%c 'c ( c &c  $c %c  %c $#c  c EC/c c c *'$c
& c c 2$%c c c %#%c %c &c  %c  c ##c c  c

# c*'c'c*##c #c$c # c*'c"c$#c%c c'cc


c $#c) cc)c%%c c $c c"c%cc$c'ccc c c
c %!,c
c *c 'c %c ) c "c #c ##*c c 'c &c  c ##c )$c c 'c
cc
%cc c c#c&c##c)$c'cc)c%c #cc) $c
 c 'c )#c c c *'c 'c 2$c  c ,c %2$c  %c *' 'c #c
c c '%#ccc)#c c'c c c'c #cc cc%$ c'c
%c)$%cc##cc)$cc'c&c'c##c*$#%c)c '%cc
'c%c%c c'c$#c'c$c#cc'c #c#,cc'c  #c  #cc
#%c#cc'c#$c%%%cc'cc*'cc'c c c c&cc#c&c'c
c&cc#cc c'c#c c&cc #c&cc$cc)c#%cc
(c'c #c )$c*'cc c%c $c'c,c c##cc c%$)#cc
),!,c%cc%%#c*,cc'%#cc %cc
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3. VAT is inflationary
ccccc7c)$c5c#cc$ccc c%c'c%$ c c"c
#c c$ 'cc$c*cc c #cc  $#cc c'c
c c"c%c'c   c c'c&c'c# c'$#%c##c$c'c'cc

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc=c
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c c ccc'c c c#cc'c&c'c'c#%ccc%$ cc c&c
c c cc)c c)c cc,!'ccc
(c c c c  c 2$ c c c c #c %c  c '$#%c )#c ' c
c
4. VAT favours the capital intensive firm c
(c c #c $%c 'c "c # c c 'c % c  c  c &c c 'c #)$!c c
%c c'c #!c c c  c 'c c  c #$c %%%c c ##c  c c
c c'c c'ccc#c)#c c#)$!c c%c%$c
c
Businesses covered by VAT
'c"cc) c##c)$cc'c%$ c%c$#c 'c c$  $c
'$'cc#c"c c ## %cc 'cc c'c 'c*'c #$c c%%%cc%cc
#c c #c )$c  #$%c c &c $  $c %)$c
*'##c#c*,c  c%c#c
c

1.10 Registration under VAT

"#$c %%%c &c $#c c % c c $c c $c c c c c @$c *'c
c#c) c$#cc#,%c$c

Value Added Tax Rules comprises of the followingc!c

2c c c#c$c%c&)#c$c
2c c c
2c
 ##c cc
2c c c $c
2c -)#cc%c( c c&c
2c @##c c#c
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%c%c )cc
2c c c $c %c
2c $c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccGc
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2c c
2c c
2c  c c c c&c
2c 7#c c )#cc
2c 7#c c)#cc
2c
#c%c 'c
2c 7 #c $c7 'c
2c -ccc
2c $c%cc
2c
 ##c c
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2c #c%cc
2c ( c cA%ccc
2c c c&c

c c 'c 'c %c c 'c c )c c 'c )#c  c #c c % %c
*''cc)$c'$#%cc c"#$c%%%c&c"cc$)c
c
( cc%#8c$#c$c& %c'c)#*c %c''#%c'c c $cc*'c
'c# #c  c c'c7#c&c c
##c;$ccc

c $#c $c  c $c  c #c c ;c )#c c


7#c $ 'c  c &)#c c
%cc#c'c
(c /////c ////c //c
-'c =/////c ////c //c
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( c'c%#8c$cc#c'c'c)c''#%c'c'ccc#)#cc ## c%cc
"c *c  c c %#c *'c c #c 'c ) c  c )c c %c %#c 'c 'c
c#c c#$cc)ccc c c=///0c!c
c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccFc
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Benefits of being a registered dealer
cc%c%#c'cc#%cKc
2c ## c"cc'c#Lc
2c #c! c c&c$c&c %c%cc$ 'Lc
2c ($c&c c%c)c c
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Effective date of registration
'c  c%c cc'cc'c%c c*' 'cc%#cc 'c"cc#Lc
*##c %%c c 'c %c 'c c ) c #)#c c c "c 'c %c *##c )c %%c c
##*Kc
a) New businesses:
( cc%#ccc%c) $c'c$#c$cc#c'c'c''#%Lc'c#)#c
c $c c"cc c'c%c'c c'c''#%c

b) Existing businesses:
( cc%#c,ccc&c)$c'cc%c c"c'c'c*##c)c#)#cc
c&cc#c c'c%c'c,cc'c)$c
c
c) Voluntary registration:
( cc%#cc%ccc#$c)c'c'c*##c)c#)#cc $c c"c c'c
%c'*cc'c   c cc
c
d) Late registration:
( c c %#8c $c 'c & %%c 'c c ''#%c )$c 'c 'c #%c #c c
c'c'c c 'c"cc'c#c#c c'cc%cc c'c%c
'*cc'c   c cc
;$'c 'c %c 'c ''#%c c c c   c c )c %c c )$c c c %#c
*'$cc   c cc
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cccccccccc c c
 c c cc cccccccccccccccccccccccccccccCc
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Certificate of registration
c%#c'$#%c#c%#c'c   c%c'#ccc c c'c   c%c
'#cc 'c# c*'c'c c cc'c)$c
( cc%#c'cc'cc# c c)$c'c7#c&c-  c*##c%c'c$c
'c2$cc c c'c   c cc%c'#c c 'c%%#c# c c
)$c
( cc%#c#c'c0c'c   c ccc'#cccc %##c%%cc
%  %c'c'cc)cc%$# c c c'c   c c'#c c'c#c&c
  c
'c   c cc%c'#cc#cc'c%#cc*'ccc$%c%cc
! )#c

Changes to business circumstances


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#c ccc$c%c*'cG/c%c c'c 'c c$cc*c
2c 3'c'c%c#cKc
2c 'cc'cc c'c)$Lc
2c 'cc'c $c c'c)$c*'$c%#$c c'c Lc
2c 'cc'c$c cc$Lc
2c 'cc'c$%'c cc*%Lc
2c 'cc'cc cc%$c%%%c;#Lc
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2c c# c%cc%#8c)$c c# cc#2$%Lc
2c cc #c cc),c $Lc
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cccccccccc c c
 c c cc cccccccccccccccccccccccccccccEc
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c%#c*##cc%cc,cc 'c# c cc*c'c $ c
c 'c c $'c  %c '$#%c )c %c *'c &c %c  c 'c 'c c
 $ c c'cc

Cancellation of registration
c%#c*##c)c#)#ccc"c*'#c'ccc  c( c'*c'c$c
##c)#*c'c''#%c'cc 'cc#c c  ##c c'cc*c
'c '$#%c $cc ## c%cc"c c'c#c*c$#c 'cc c ##c
 ##%c##c'cc)c##*%c'ccc $c
( cc%#Kc
2c % $c'c)$Lc
2c %c cc##cc c'c)$Lc
c%#c$c c'c7#c&c c*'c./c%c c'cc(c c c%#c
c#c c)$c'c$ c*##c%cc#c cc 'cc   c
;c  ##c ccc%#c'$#%c$)c c/.c*' 'cc#)#c*'c'c# #c
#c&c  cc
( c'c7#c&c c  #c'c%#8cc'c$c$c'c
  c c
c
'c  ##c  c 'c   c %c c   c 'c #)#c c c c &c c c
#cc c cc%ccc'c%c c  ##c c'cc
c
'c)#c cc%c%#c
;##*cc'cc*' 'c%#8cc)#%cKc
2c %#c #c 'c   c  c c %c '#c c 'c # c  c
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'c cc'c)$Lc
2c  c'c#c&c  c cc 'cc'c%#c$#c%cc'c#c
&c  Lc
2c ## c"cc##c#cccLc
2c # $#c'c&c%$c%c$)c  c #c%c# c c$c%cc'c
$c c&c%$ccc) c'c%$c%Lc

cccccccccc c c
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2c $c&c c0c)##cc 'c%$cc##c $Lc
2c c%2$c %c%cc'c cc%c c cc c'c%c c'c
&ccc*' 'c'c#Lc
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c%c%c##c cc'cc% 'c'c%$c
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1.11 METHODS OF COLLECTING AND CHARGING THE VAT

A##c'cc1c'%c'cc ##*%c*'#c 'c%c ## c'c"Kc

1.c Invoice or tax credit methodc'c&cc ## %c%c '%c#cc'c)c c'c


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 c' c'c%  c )*c'c&c%cc$ 'c%c'c&c)#cc
#ccc'c cc'c"c

2.c Subtraction Methodc%c'c '%c'c&c c ## %c%c '%cc'cc


#$c c'c&c)#cc #c%c$ 'c )c#c'cc c&c# )#cc'c
%c' c'c%  c)*c'c#c c%c$ 'c c*$#%c)c"c(c
c"cc'c&c*' 'c $c$##c  c(cc ## %cc 'cc'c&c
#c%c c)c##*%ccc cc %c' ccc ##%cc6cc&c

&#c
'c ##*c &#c '*c '*c 'c "c *,c '$'c 'c 'c c $  $c c
#c
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c c )$c c c %c 'c $)#c %c $  $c #c #c $#Lc
'c c@c)$c'c$#cc)$#,c c
cc%c#'c'Lc',c
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cccccccccc c c
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'c#c%c$ 'c $c'*cc'c&#cc& #$%c&c
 $#c $c "c >c
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cc c c

c ccc%c $)#c =////c 1///c


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"#$c%%%c /////c c
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cccccccccc c c
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## %c#c%#8c$ 'c c$%c%#cc!c$ 'c
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cccccccccc c c
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(c  c'c&cc ##c)c)c'c$#c $c*'cccc%c%#cc
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Rates of value added tax
'cc*ccc c"c<Bc%c1=Bc'c%cc$%cc c '%$#cc
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c /Bc ")#c#,cc)%c
@c Bc  $c#c%c $cc%c'c*##c

c <Bc *c #c  %c %$#c $c  %c  c
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c 1=Bc -'c'cc  %cc '%$#cc@c
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Composition schemes

c %#c c %c c %  $#c c ,c %#%c  %c c #c ! c ;c $ 'c
%#cc#c%c#c'%c c $c c"c'c)c%$ %c'c'%c
c 'c c  'c (c c )c %c 'c c  'c c c c c )c c &c
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c

Tax payable by dealers opting for composition in lieu of VAT


'c ##*c #c c%#cc#)#c cccc&c$%c Kc
2c ##c##cc#ccc $c

cccccccccc c c
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2c $c c '$c '#c & #$%c '#c 'c %c  c +;$c 78c %c
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c
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#)#c'cc)c%%ccc c'c$%#ccc'c#c9  cc'c
%c c c 'c c %c %c c  'c  c 'c c  'c 'c
9  c&#c'c '%#c c $c c$c #)#cc&c%c'cc c
c)#c
c %#c c c c 'c c c c 'c )c  c 'c  #c c %c 'c c
$cc)cc c%#cc#c##c'c%c c'c  #cc( c%#c*'cc
* 'c c c #c "c 'c c %c c #c c 'c )c  c 'c &c  #c c
*cc*c%#c cc c cc'cc cc
(c  c  c *,c  c 'c  c c 'c c % 'c &c #)#c $%c
cc c$ 'ccc c)c& %c)c'c  cc  cc
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Constitutional Framework Which Deals With The Levy Of Sale Tax

'ccc*%ccc#c&cc'c%c'cc$) cc$ 'cc#c)c


 c #*c 'c #c 'c  %c 'c
7c  c %c 'c c c c 'c  c  c
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c 'c#c c%c% %c$%c'c7#c cA%c c


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c  c c%c$%c'*cc3,c
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c  c c'cc$cc%cc#cc'*c

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc1=c
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c 7$#c c %c)c'c #$)cc)%ccc)c
c 7$#c c %c #cc%,c c $c

'c c %c)c c cccc %%cc)c%%c#c%c*c c)c


& %ccc&cc $ 'c #c )c'c c7cc#c*%cc%c #c
c c #)#c c c &c %c 'c c c %c c  %$#c #c
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%c c

c %c 'c c  c &c c c %c 'c "c #*c c )c # %c c
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(c%cc # $#c'*c$ 'c&cc%#c'ccc'c$c c%c'c$c c


#c %c $c  c $ 'c 'c  %c c c c  c 'c $c  c &c %$c c
c
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Calculating turnover of sales and purchases
'c$c c#cc'c#c c'c$c %cc )#c& #$%c"c '%c
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"c '%c#cc c c'c$ 'c c%c#c'c$c%cc%#cc
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Credit notes and debit notes.
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Auctioneers
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Works contracts
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1.13 POINT OF LEVY IN CERTAIN CASES :-

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Conditions for claiming set off
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1.14 VALUE ADDED TAX RECOVERY:

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REPORTS OF AMENDED POLICIES OF VAT
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VAT (VALUE ADDED TAX) 2010 (INDIA)
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1.c Taxes on Tobacco Products
cc9*c #'c c/Fc1//c(@cKcc'cc) c
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2.c Higher VAT squeezes cola, ice-cream cos margins
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3.c Reforms in tax structure mooted
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4.c CPI leader demanded reduce VAT on food items in Andhra Pradeshcc
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5.c Online payment of service tax of over Rs 10 lakh made mandatory
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6.c Traders to observe May 1 as Anti-VAT day
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7.c Fuel traders threaten indefinite strike over diesel VAT
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8.c CAIT to decide action on Goods and Services Tax
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9.c Delhi govt decided to withdraw the value-added tax (VAT) on LPG
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10.c Delhi Traders carried out a ``VAT Shav Yatra´
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15.c CAG recommends VAT on fabric, sugar in MP
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16.c Rajasthan govt says new VAT not applicable on essential food items
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17.c Rajasthan budget raising the lower VAT rate of 4% to 5%
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18.c harkhand budget diesel VAT rolled back
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19.c Houses to cost more after service tax
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20.c Orissa to offer VAT exemption to IT SMEs
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21.c Goods and Services Tax delayed, now from April 1, 2011
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22.c Auto cos wants govt to retain 8% excise duty
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23.c VAT on goods up in Haryana
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24.c The sale of cotton exempted from the VAT
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25.c No impact of VAT reduction on mutilated rags
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26.c Liquor becomes dearer from April 1
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28.c Rajasthan govt has announced VAT exemption on imported sugar
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29.c Centre, states differ on GST rate structure
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30.c ASSOCHAM opposes hike in VAT by three states
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%%c c &%c "c c c *'%*c c c c #%c &%c )c 'c c ( c "c
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)%c %cc'c'c c(%c&c7$ Kc7#cA$$cccc
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cccccccccc c c
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31.c Pawar mulling removal of value-added tax (VAT) on sugar imports
cc H$c Cc 1//Kc  c  c $c *' 'c 'c c 'c %$)#%c c 'c c c c cc
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32.c ICAI wants GST rollout to be delayed by a year
cc 9 3c 6c H$c Gc 1//(Kc 'c ($c c
'%c  $c  c (%c (
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33.c Delhi shifted to a 5% Value Added Tax (VAT) slab from 4%.
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34.c States have been asked to remove VAT and other taxes on imported sugar.
cc 9*c #'c H$c <c 1//Kc ( c c 'c 7'c *'c '%c c c  c

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35.c Pranab to meet state FMs on an 13; govt to miss GST deadline
cc9 3c 6(cH$c/c1//Kc; c c)c $,'cccc  cc
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36.c Low VAT/GST be imposed on processed food: Sahai
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37.c GST launch set to be delayed
cc 9 3c 6(c H$c Cc 1//c Kc @c ##c % c 'c %c A%c %c 7 c &c
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cccccccccc c c
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38.c Industry favours early implementation of GST
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MODIFIED VAT (MODVAT)
cc
3.1 INTRODUCTION
%c %c c U % %c "#$c %%%c &Uc (c c c  'c c ##*c # c c #c
$  $cc'c& c%$c )c )c'c$#c c c c%c$  $%c)c
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c$  $c-c6%c*$#%c'c%c& c%$cc c$  $%c)cc%cc
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%%%!&c"c
'c %c %c c )c $#5%c *%c c  c & c %$c c 'c #c %$ c
3'c 'c  'c *c c %$ %c c %c #c c & )#c %c A%$##c 'c
 c  c 'c %c  'c 'c )c #%c c c c c $%c $c   c
;c Gc  'c EE=c ##c & )#c %c c ,c 'c ) c  c 'c  'c & c 'c
%c)#*K!c

In case of inputs

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c 'c 'c c ) cccccccccccccccccccccccc
%c )c ) c%c #cc ) c
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3.2 ADVANTAGES OF MODVAT
?ccc(c%$ c'c  c c&cc$##cc c$  $c
?ccc(c  #c%$c c&c
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3.3 DISADVANTAGES OF MODVATc


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3.4 The MODVAT scheme is regulated by Rules 57A and 57U of the Central

Excise Rules and the notifications issued there under.c


c
Rule 57A
'c$#c  c'c c%c# )#c c'c%c'c%c 'c#cc##c
'%c & )#c %c *' 'c 'c )c  %c )c 'c
#c Ac c 'c -  #c
A5c c'c$c'c%c 'cc)c%c# )#cc c c c%c
c #c c%c*'c c%c %c
;c'c$c c'c%c 'c$c #$%K!c
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$  $c c'c #c%$ c
?ccccccc%c ,c#c
?cccccc($c$%cc $#c
?c c c ($c $%c c 'c c  c #  c $%c *'c 'c  c  c %$ c cccccccccccccccccccccccc
$  $c  c #c %$ c c c c 'c $c )$c %c c  #$%K!c
c
c  'c  'c #c 2$c $c #c c # c *' 'c c $%c c

cccccccccc c c
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c
%$ cc c cc%cc c)c)$cc 'ccc$) cccc
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%c 'c )c &%%c c & c %$c %c c #c #c %c #,c #c  'c
2$c  c *' 'c c $%c c 'c $  $c  c 'c '%c %$ c
c
c #c c 'c #c %c c $%c c 'c  c  c %$ c %c  c %c *##c )c
##*%c 9c %c c #)#c c  c  c #c %c c $%c *'c 'c  c  c
%$ c
c
?ccc ,c #cc c c*' 'cc&cc'c&c c& c%$c)#cc
'c#$c c ,c#cc)c#%c c c ,c c #c%$ c
?c cc ,c #c c'c c c*' 'c c c #$%%cc'%c c)c  #$%%c%$c'c
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?ccc'c$  $c c#c c'c) c c%c %cc'c #c%$ cc'c&c
 c  %c%$c%cc'c $c'c ) c c %c*##c )c#)#c#c  c'c #c
%$ c c c & )#c %c %c %c *##c c )c #)#c  c 'c #c %c c c c
& )#c%ccc&c c%$ccc ')#cc#cc c%$c*c) c c
%c*##c)c#)#cc'c #c%c$  $%c)cc$ccc;c%cPcccc
//c c c -c *'c c & c %$c c )#c c #c %c *' 'c c &%c
c
;c&#c@
c6%c$ '%c*c#c cEE//c #$c c& c%$c>ccc
c%c#c&c>c/cc c %c %c#)#c*##c)cF<.c
c& #$%c#c&c
*##c )c E///c $c  c *' 'c & c %$c *##c )c F<.c c E///0/EDEc
c
Rule 57D
%c %c *##c c )c %%c c %c $c ) $c c  c 'c *c #c %c 'c
$c c  c  c *' 'c & c 'c )c %c ) c *c c  c c 'c $c  c 'c
$  $c c
7##c %c %c *##c c )c %%c c %c $c ) $c c 'c $c  c 'c
$  $c  c  c c & )#c #c %$ c c %c %$ c *' 'c c !

cccccccccc c c
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& )#cc*' 'cc ')#cc& cc#cc c%$cc*' 'cc&c c& c%$c
c %c
(%c%$ cc'c%$ c*' 'cc%$ %cc'c $c c$  $c c'c
#c%$ ccc'c$  $c c# '#c c$ c c#cc%$ %c c
*' 'c# '#cc%$ %c(c$ 'cc$c#ccc%c%$ c*' 'cc
'%cc& c%$c'c) c c%c*##cc)c*'%*c c'c%c%$ c
%c c !& )#c c c ')#c c & c c #c c  c %$c c c &c c & c
%$c3''cc%$ ccc %c%$ ccc #c%$ c%%cc'c  c%c
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$  $c c  %c )$c c )c c #c %$ c c 'c $  $c  c
c
Rule 57E
( c'c& c%$c%cc%)#c$cc$)2$#c %cc $%%c'c%c
#%cc'c)c c'c$c*##c#c)c %cc%$ %cc'c cc)c( cc
$cc $%c%$ccc$#c c$ 'c cc'##c)c %c c'c$  $c
'c c'c)# c%c)c'c*'c'c& c$'ccc 'c
c
Rule 57F
'c %)#c $c $c )c $%c c c c #c c 'c $  $c  c #c %$ c c
*' 'c'c 'c )c )$'c c'c  c*c'c $c c )c%c c'c
 c c 'c $cc c&c$%c)%c )$c#c  c c'c c

## c 'c $% c c 'c  c %c )c c %%c  ,*#%c  c 'c
c3'c'c$cc%c c'c $c& c%$c$c)c%cc#c c
c$c2$#cc'c%c %c #%cc c c$ 'c$c
'c%)#c$c c#c)c%c c'c  ccc# c$%c'cc$ 'cc
 c'c 'c )c ##c  %c c 'c $c  c $  $c )$c#c  c c
'c c
## c 'c $% c c 'c  c %c )c c %%c
 ,*#%c c'cc cc c'c ##*c$K!c
?ccc;ccc c %cc c$cc'cc2$%c c
'c $  $c  c #c %$ c %%c 'c  c $ 'c *,c 'c $c c $%c c 'c

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc==c
c
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c$c#c)c$%cc'c  c
ýcccc;c&c c$c$%c)%c*'$cc c& c%$c
ý ccc;c'c $c c$ccc c& c%$c
ýc c ;c $  $c  c %c %$ c  c c 'c $  $c  c #c %$ ccccc
%%c'c c$ 'c$  $c'c%c%$ cc)$'c) ,cc'c  c
c)c $'c$%cc'c$  $c c #c%$ c'c*c%cc$ 'cc
$c#c)c$%cc'c  c
ýc c ;c &c  c 'c %c %$ c $%c )%c *'$c c  c & c %$c
?c ;c 'c $c  c 'c %c %$ c c c  c & c %$c
*c*cc c2$%cc)c$%c c cc& c%$c c%cc'c
*c
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'c )c *,c %c $%c )c 'c )c *,c  c A##c 'c %c c $c )c
$%cc'cc$  $c*'cG/c%c( c'c)ccc #%c*'cG/c%c
'c%cc)c&%%c c'cG/c%c
?ccc'c) c c'c$#c c#)#c#c  c'c c $  $c%cc c$c c
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$  $c$%c'c  c)c'c)c*,c
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?cccc*%cc c& c%$cc'c #c%$ c
?c c *%c c  c & c %$c c *c c c 'c $c  c $  $c  c #cccc
%$ c
?c c *%c c  c & c %$c c $c '#c *'c 'c c #%c c 'c
$c
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$  $%c )c $c c c ;c %c Pc c )c //c c c -c c )c $c c c
#  c %*c  '#c ,c c )c $c c c 7 *c  '#c ,c c )c
$#5%c c% 'c%$c#)#cc#c #c%$ c #%c c'c $c
( c'c$  $c%cc'cc& c#)#c'c%c %cc)c $%%cc

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc=Gc
c
'c%%c 'c'c c#%c #%c%*) ,c c%$c$%c'c
#c & c$#c
c*cc c c c%)#c$cc c c*' 'c %c'c)c
#%cK!c
?cccc@c%c)cc c%$c c$ 'c*cc%$ %cc'c  c
?cccc@c%c*'$cc c%$c*'c%c)c%c c'cc
?cccc@c%%cc'c c ccc  cc# c%c)c'c$  $c%c
 c $%c$ c c $'c$ccc*'c'c%$c)#c'c%%c'c$  $c
 c 'c c $'c c #c Fc %c c % c c *c c %c 'c
2$c c*c%c'c%cc*' 'ccc$%cc)c%%c%c c #c
*'c##c'c %ccc)c )%c)c'c
## c c
#c & cc'c)'# c
cccccc'c $  $cc cc$#c %c %c cc c'c  cc'c
*'c#c c'c
## c c
#c & c%%c# c c %c )c 'c c
'c)'# c%c##c %c%c)c'c
## cc %c

Rule 57G
;c#c'c) c c%c'c$  $c$c c$c c %$cc$c
#c c % #c *'c 'c c
## c  c
#c & c 'c $% c c 'c
 c % c'c% c c #c%$ c $  $%c c'c  cc%#c c
'c $c $%c c $ 'c $c  'c  c 'c %c %$ c c $c #c c %#%c
 c 2$%c )c 'c c
## c  c
#c & c %c $c )c %%c
 ,*#%c c$ 'c% #c
'c $  $c c #c  c %c %c #c  c 'c )c % #c c #%c )c 'c
*c'c c,c %c$#c'c $c c %c*'cc  c%cc
c
#c & c$#c;c !c(c c c %c%cc $c)c %c*'c
# c c  c @##c  c c c
  c  c #c )c
$c %c c c c c
  c (c 'c *%c 'c %c $c )c  %c *'c  c 'c %$c 'c )c %c c
'c
'c
#cAc'c'c*cc% c'c%c %cc  %c$cc)c
##*%c c $ 'c c %c $) c c $ 'c %c c c c % c *'$c %$ c  c
% $c% c'cc c%$c
3'c c  c  c c c 'c $c  c #c %c c #c c # %c 'c
$  $c c #c%c %cc'c)c cc# %c'c$  $cc #c

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc=Fc
c
%c %c c 'c )c  c 'c #c  c $) c c 'c   c  c #c & c
$'c
c
A manufacturer of final products shall maintain:-
ýc c c c c c  $c c c  c Ac 1.c !c c (c %c c ((c c  c  c %$c )#c c #c
%$ cc(ccc %c c$c%c$)2$c$#cc'c$  $c c
c((ccc %c c%c %ccc$ 'c$c
ý cccccc $c $cc c'c& c%$c)#cc'c #c%$ c #%cccc
?cccccc$  $c c #c%$ c$c$)c*'c c%c c'c #c c 'c'c
c'c7$%c c
#c & c'c ##*c% $K!c
?ccccccc-#c% $c% cc c%$c
?ccccccc & c cAc1.cc(c%cc((c
ccccccccc c c'c$c'c7$%c'##c%  c'c% $c%c$c
'c c 'c $  $c 'c
## c c 'c %c c 'c $c c %c
&c c%$ cc 2$ c c#c%c cc%c'c'cc'c c
$)c  c $ 'c $c c  c  c c c c #c  c c c c #c
c #c c'c %c$c)ccc*'cc%cc& %c1c%c
 c 'c #c  c  'c 'c c c #c c #c  c 'c  %c $c )c c
c *'c c %c c & %c 1c %c  c 'c #c  c  'c 2$c *'c 'c
cc#c cc&c)%cc'c2$c c # c%$cc  #c
c
ccccccccc(c c 'c $  $c c c c c c c #c 'c  %c $c c c c
$  c $c'cc
## cc ##*c'c $  $cc,c %c c%$c
%cc$c %c'c%#c%cccc*c c$ 'c %cc
c
c
The Assistant Collector must see that the following conditions are satisfied before giving
allowing such modvat credit:-
2c c($cc c c*' 'c %c c%$cc##*%cc %cc'c  cc) c
&c'c c'c%c c #c% #c%cc) c%c c#)#c c%c
%c

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc=Cc
c
2c $c c%$c c*' 'c %cc$'c'c)c $##c%cc'c$c
2c c($c'c $##c)c$%cccc)c$%cc$  $c c #c%$ c
2c c'cc$c c c%)#c$c$c ##*c c %$c%c
$cc%c*'c'c
#c & c$'cc $c c  ,c $c
c 'c Ac 1. c c '##c ,c c c Ac 1. c c 'c %c  c 'c %c  c  c %c
$c c& )#c%c%K!c
2c c7'##cc'c%c cc
2c c
 #c,c$ 'c),c $cccc'cc2$%c
2c c7'##cc  #c)#cc#ccc'c& c c  c cc
2c cc$ 'c),c $cccc c c)c'c  %c$'c%c
##*c$ 'c c
2c ##*c 'c  %c   c c ,c c c & c c %c 'c  %c c 'c
 %c  c
ccccccccccc7$ 'cc'##c$c#!*c c c%#cc )%c)c'c
#cccccccccccccccccc
@%c  c & c %c
$c c )c 'c
## c  c
#c & c c 2$%$# c c
##*K!c
Åc -#c cc c'c)$c
Åc c7 %c cc c'cc
Åc c'%c cc c'c& c%c
Åc c;$'c ccc)c%c)c'c$c
c
'c c c'c ##*c%#K!c
2c c % c'*c c cc c& c%$c
2c cc c%$c%c$c c%$c%$c%)ccc'c6c%c%c$)c c$ 'c
c
2c c#c %%c c %c %c  c 'c & c   c $%c *' 'c 'c $  $c
##cc%c%%c%c %c$)c& cc$)c c'c  c%c
#c 'c c %c %%c  c 'c c % c %c   c  c %c
$)c c ,c#c2$c c%c#c c c%c#c)#c#$c
c c%$c#c%$c%c#c$)c c%)ccc'c#c#%c $c

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc=Ec
c
%c%cc c#c c%c%c ccc' #cc$)c
%c   c%$#c%c)c$'%ccc'c*'cc%c)cc$c
2c c  'c c),c$c)c$' %c)cc*,cccc% cc
 c
?c  'c  c '##c )c c %c #c $)c $c c 'c *'#c  #c c
)cc'c7c#c 'cc-#cc c),c c 'cc'##c)c$%c
)c'c%cc c#c c& )#c%ccccc$#c'*c
 ##c%c)c'c ## cc*c
2c c  'c #c c'c c),c'##c)c$' %c)c'c*cc'c*,cc
c 'c c % c c 'c c  c c 'c c c )c ) c )c
)$'cc$c)c'c%cc'c#c$)c c'c c) c)c
)$'cc$c'##c)c%cc'cc
## c c
#c & c%c%%c
 ,*#%c c c c$ 'cc'##c)c%c)c'c%cc
3'c'c cc%c'$'c $c#c$)c#c$)c#,#cc)c
$%cc'c '! c2$c'##c)c%cc'cc
## c c
#c
& c%cccc'ccc&'$%cc%cc$c)c%c %c
%c c%c'$'c $cc#c %c7$ 'c%c%#c'##c
%c %#c c  *c $%c  #$%c 'c c c  c c 'c c

## c c
#c & c

Rule 57I
'c& c$'cc%##*c%c %c*' 'c'c)c*#c#%cc  #c
$#%c(c c%c %c'c)c,cc $c ccc $ c'cc
  cc%c cc'c$  $c*'cGc'c c'c%c c #c c$cc
'*c $c *'c $ 'c %c %c '$#%c c )c %##*%c (c $ 'c c *'c %c
%c 'c #%c )c $#%c '*c $c  c $c c 'c $#%c $c $c c )c
 %c c'cc
(c c $ 'c *c %c %c c c  $c  c *## $#c !c ##$c c
$c  c  c c 'c c  c $  $c %c  c 'c  %c %c  c Gc 'c
 c c )c c c c %c *'c =c c c %c  c #c  c %c %c 'c
%c  c c )c $c %c *##c c )c %%c *'#c %c 'c  %c %c
'cc  c$c %c'cc c'c$  $c*'c%cc'c'*c
$c c%c' cc%c'c$c c%##* c cc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccG/c
c

 c!ccc<
CENTRAL VALUE ADDED TAX (CENVAT)

4.1 INTRODUCTION

% %c"#$c%%%c&c - "c 'c'c)c# %c)c


#c"#$c%%%c&c

9"c7 'c*'c  c c<1///c'cc c %c c *#c %c$#c
=Fcc=Fc
9"c7 'cc cc'ccc - "c7 'c& c'cc
c #c c 'c'c *'#c c  'c c $c %c #c %c c %c c
c $%c
9"c 7 'c 'c  c  c 'c 7 'c c #c &%%c c 'c ##c $c
& c 'c 7%c #c -#c %c #c %c   %c #c %c & c 2$c c
# c$%cc  cc %cc'c7 'c

4.2 RULE 1 ± RULE 33

Rule 1. Short title, extent and commencement.-


c 'c$#cc)c ##%c'c
#c & ccc$#c1//1c
1c 'c&%cc'c*'#c c(%c
.c 'c'##c cc  cc'cc%c c  'c1//1c
c
Rule 2. Definitions.- In these rules, unless the context otherwise requires, ±
c I Jcc'c
#c & c cE<<ccc cE<<Lc
)c IJc  #$%c # !c  c %$c %c )c 'c c %c #c
c$%c$#cFLc
 c IJcccc*'cc#)#c cc c%$c%ccc%$ c
c $  $c  c & )#c %c c c %c c  c c c *'$c c
*' 'c& )#c%cc%c%c #$%cc$'5%cc c$ 'cLc
%c I@%Jcc'c
#c@%c c & c%c
$c $%c$%c'c
#c
@%c c$c cEG.c=<c cEG.Lc
c I%$Jcc'c%$c)#c$%c c.c c'c Lc
 c I  Jcc'c  c$)#'%cc'c-  #cA5Lc
c I c Jcc'c
#c & c c cEC=c=c cECGLc
'c I*'$Jccc# ccc%c$%c$#cELc%c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccGc
c
c *%c%c&c$%c 'c )$cc% %c%c% %c c'c  c'##c 'c
'cc #c%cc'cc'c c
c
Rule 3c Appointment and jurisdiction of Central Excise Officers.-
c 'c @%c c )c   c c $ 'c c c c ',c c c )c
#c
& c-  cc& c##ccc c'c*c  %c)cc$%c'c c%cc
'c$#c
1c 'c@%cc)c  c  c'c$% c cccc
' c
c c

#c & c
c  c
#c & c c
c  c
#c & c
#c c'c$c c'c c%c'c$#c%c'$%c
.c c
#c & c -  c c & c 'c *c %c % 'c 'c %$c
 %cc%c )cc$%c'c cc'c$#cc c'c
#c & c
-  c*'cc$)%cc'c
c
Rule 4.c Duty payable on removal.-
c cc*'c%$ cc$  $cc& )#c%cc*'cc$ 'c
%c c c *'$c '##c c 'c %$c #)#c c $ 'c %c c 'c c
%%cc$#cCcc$%cc'c#*cc%cc& )#c%ccc*' 'cc%$c
c)#c'##c)c%c*'$cc c%$c cc# c*'c'cc
%$ %cc$  $%cc cc*'$c$#c'*c%%Kc
cccccccccccccccc%%c 'c 'c %c ##c $%c
'c Gc c G1c  c 'c ;c 7 '%$#c c 'c
 c  c %$ %c c $  $%c )c c )c *,c c )c %c *'$c
c c%$c#)#c'c%c'c%$c c& c#)#cc$ 'c%c'##c
)c%c)c'cc %ccc$)!$#c.cc c$ 'c%c'c)c%$ %c
c $  $%c )c 'c c 'c %c  c #c  c $ 'c %c c 'c c
%c$%c$#cEc
cccccccccccccccc !c (c c ')c # %c 'c *'c $ 'c c 'c $'%c 'c )c
*,ccc'c%$c #)#cc$ 'c%c$%c$)!$#c.c$ 'c%$c'##c )c
%c )c 'c )c *,c c 'c %c  c #c  c $ 'c %c c 'c %c
c
1c 9*'%c'c %cc$)!$#cc*'c#cc%$ %ccc
,'%c$c  c'cc*'c $c$ 'c#c*''c% #c c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccG1c
c
$ 'c  c c'*c c $c c 'c $  $c c c %c *''c c
c& )#c'##cc'c%$c#)#cc$ 'c#cc'cccc c
$ 'c#c'c)c%$ %c)c'c $c
.c 9*'%ccc'c %cc$)!$#cccc*'cc'c%c
##c $%c
'c Gc G1cc  c 'c ;c 7 '%$#c c 'c  c  c %$ %c c
$  $%cc'c $cc)c*,c'##cc'c%$c#)#ccc$ 'c%c
c $ 'c c %c c $ 'c c c c )c   %c $%c 'c $#c *''c 'c
c  c $ 'c %$c )c  $%c )c )%c c '*c c  c $ 'c %c 'c )c
$  $%c)c$ 'cKc
ccccccccccccccccc%%c 'c $ 'c c c $'c 'c )c *,cc c 'c %$c #)#c c
$ 'c%cc'c)'# c%c'c)c*,cc$'%c$%,cc% 'c##c
#)#c%c #c*'c##c'cc c'c$#c
ccccccccccccccccc c !c ;c 'c $c  c 'c $#c 'c &c I)c *,Jc '##c )c
%%ccc'cc*'c$%,c'c cc cc'c)cc
& c'c '%c%c #cc##c cc ##c$%c
'cGccG1c
 c 'c %c ;c 7 '%$#c c 'c  c ;c 'c #c  c %$)c c c $'c
# %c 'c 'c )!*,c c #c c c  c 'c  c 2$%c c 'c
$  $cc c'c%c%c%c)c'cc)$c'$#%c)c) ,c'cc
c'c #c cc'c$  $c cc'c  c
cccccccccccccccc c
c ;c 'c $c  c 'c $#c & )#c %c $  $%c c c
 c%cc$#%cc$ 'cc c$) ccc cc c'c$  $c c
c 'c %cc c $ 'c  c '##c )c %%c c 'c )c %c c
$ 'c  c%#c) c$ 'c$#c
<c 9*'%c cc 'c %c c $)!$#c c
c c c
& #c  $ c 'c %c c 'c $c  c 'c %c %c 'c  c
c cc'cc c'c$  $c*'c'c%cc%ccccc
$  $c c c 'c %c c c 'c # c $%c $ 'c c *'$c
c c%$c$) cc$ 'c %cc'cc  c
c
Rule 5.c Date for determination of duty and tariff valuation.-
c 'c c  c %$c cc c  c #$c # )#c c c & )#c %c c 'c 'c
,'%c #c '##c )c'cccc#$c c  cc'c%c*'c $ 'c%c
c%c cc  ccc*'$cc'c cc)c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccG.c
c
1c 'cc c%$cc'c c c,'%c#c'##c)c'ccc  cc'c%c
 c c c$ 'c#cc'c  c c'c $c c$ 'c#c
ccccccccccccccccc !ccc( cc& )#c%cc$%c*'c'c  cQ'c%c c#c
 c$ 'c%8c'##cc'c%cc*' 'c'c%cc$%c c$ 'c$c
.c 'c c  c %$c c 'c c  c %cc ##c $%c
'c Gc c G1c  c 'c ;c
7 '%$#cc'c c c%$ %cc$  $%ccc)c*,c'##c)c'ccc
 cc'c%c c#c c$ 'c%c)c'cc %ccc$)!$#c.c c
$#c<c c'cc%c$%c$#cEc
c
Rule 6.c Assessment of duty.- The assessee shall himself assess the duty payable on any
excisable goods:
ccccccccccccccccc%%c'cc c c c'c7$%cc( c c
#c & c
'##cc'c%$c)#c) c#c)c'cc

Rule 7. Provisional assessment.-c


c 3'c'cc c$)#cc%c'c #$c c& )#c%cc%c
'c c  c %$c # )#c 'c 'c c 2$c 'c c
c  c

#c & cc'c $c
c c
#c & cc'c cc)cc
*c c c c c  c %$c c #c )c %c 'c c

c c
#c & cc'c $c
c c
#c & cc'c
cc)cc%c##*cc c%$cc#c)cc$ 'ccc
c$ 'c#$ccc)c  %c)c'c
1c 'cc c%$cc#c)cc)c##*%c c'cc& $cc
)%cc'c c )%c)c  c)c'c@%c*'c$ 'c$cc $c
c $ 'c $c c 'c c
c  c
#c & c c 'c $c

c c
#c & cc'c cc)c%c c)%c'cc c
c c%  c)*c'c$c c%$ccc)c ##c%c%c'c
$c c%$c##c%c
.c 'cc
c c
#c & cc'c $c
c c
#c
& cc'c c c )c'##cc%c c #ccccc c )c
 c 'c #c  c c c )c 2$%c c #5c 'c c c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccG<c
c
#)#c )$c *'c c %c c & %c &c 'c c 'c %c  c 'c
$ c c'c%c$%c$%c$)!$#cKc
cccccccccccccccc%%c 'c 'c %c   %c c 'c $)!$#c c c $  c $c )c
'*c%c'ccc)c %%cc*c)c&%%c)c'c
c c

#c & c c c $'c %c c & %c &c 'c %c )c 'c
' c

c c
#c & c c$ 'c $'c%cc'cc%c c
<c 'c c '##c )c #)#c c c c c c $c )#c c
#c
Ac 2$c c%c c #c c $%c $)!$#c .c c'c c
  %c )c 'c
#c Ac )c   c $%c $%c  c c c
 c c @c  c 'c  c c 'c c %c  c 'c 'c $ %c 'c 'c c
*' 'c$ 'c$cc%%c##c'c%c cc' c
=c 3'c 'c c c #%c c c  $%c 2$c c %c c #c c
$%c $)!$#c .c $) c c $)!$#c Gc 'c '##c )c %c c c c $ 'c
 $%c c 'c c   %c )c 'c
#c Ac )c   c $%c $%c
 c c @@c  c 'c  c c 'c c %c  c 'c 'c $ %c 'c 'c c
*' 'c$ 'c $%cc%%c##c'c%c c $%c
Gc c$c c $%c%%c$%c$)!$#c.c'##c)c %%cc'c;$%Kc
cccccccccccccccc%%c'c'c$c c $%c %c c )c %%cc'c;$%c )c%cc
'c# c c$ 'c$cc#)#c!c
c 'c%$c c& c%c)c'c$  $c c'c'%cc%cc'c % c c
$ 'c%$ccc'cLcc
)c 'c%$c c& c )c )c'c )$c  c 'c '%c c%cc'c  % c c $ 'c
%$ccc'cc
c
Rule 8c Manner of payment.-
c 'c %$c c 'c %c %c c 'c  c c 'c *'$c %$c 'c c
'c c'c'c'##c)c%c)c'c1/'c c'c'c%c'c%$cc'c%c
%c c'c  cc'c*'$c%$c'c %c 'c c'c 'c
'##c)c%c)c'c='c c'c ##*c'Kc
ccccccccccccccccc%%c'cc'c c c%c%c%$c'c %c 'c c'c'c
 c  'c'c%$c'##c)c%c)c'c.c%c c  'Kc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccG=c
c
ccccccccccccccccc%%c $'c 'c *'c c c c #c  c 'c &c $%c c
  c )%c c 'c #$c  c # c c c  #c c 'c %$c c %c
#%c%$cc #%c'c'##c)c%c)c'c='c%c c'c ##*c'c
ccccccccccccccccc !c;c#c c%$)ccc')c # %c'c'c%$c#)#c'##c
)c %%c c 'c )c % '%c #c  c 'c $c )#c c %%c c 'c
 $c c'c
#cAc)c'c  %c%c
1c 'c%$c c& c'##c)c%%cc'c)c%c c'c$c c'c$#c
c 'c & )#c %c %c c 'c c %%c $%c $)!$#c c %c 'c
%c c$ 'c%$c##*%cc%%c)cc$%cc$#c
.c ( c'cc #ccc'c$c c%$c)c%$c%c'c'##c)c#)#ccc'c
$%c$c#*'ccc'cc  %c)c'c
#cAc
%c   c $%c  c c @c  c 'c  c c 'c $%c $c c'c
%cc*'c'c c%c c%$c%c##c'c%c c $#cc c'c
$%c$c
<c ( c'cc% $#!c
c cc ccc#c%c'ccc% '%c)%cc%c c'c
%c c'c%cc*' 'c'c#c*c%$ccc  #ccc
c cc c#c)c'c%$c%c c'c'%cccc  #cc*''c
c$ cc'*c
cccccccccccccccc'c'cc'##c  c'c  #ccc'c%$cc#c$%c'c$#c
c c %c  c *c 'c c c 'c %c  c $ c  c 'c %c
%c)c'cc
c c
#c & cc'c $c
c
 c
#c & cc'c cc)cc'c%cc##c$ 'c%cc*' 'c##c%$c
c%c*' 'cc#c%c%$c'c%c'cc'##c)c2$%ccc
& c%$c c 'c c)c%)cc'c $c $c%c c'cc c
c #$cc'##c)c%%c'c$ 'c%c'c)c #%c*'$cc c
%$c%c'c 2$ c%c#cc%%cc'c$#c'##c ##*c
c
Rule 9.c Registration.-
c cc*'c%$ c$  $c cc%c'#%cc!c
c*'$cc'*c$c& )#c%c'##cc%Kc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccGGc
c
ccccccccccccccccc%%c'ccc)%c$%c$#cF<c c'c
#c & c$#cE<<c
c$#cEc c'c
#c & c91c$#c1//c'##c)c%%cc)cc#%cc'c
c%c$%c'c$)!$#c c'c$c c'c$#c
1c 'c@%cc)c  c%c$) cc$ 'c %cc#ccc)c
  %cc$ 'c  c  ccc #c cc*'ccc2$c
$ 'cc
.c 'cc$%c$)!$#cc'##c)c$) cc$ 'c %c $%c%c
 %$ccc)c  %c)c  c)c'c@%c
c
Rule 10. Daily stock account.-
c c c '##c c c  %c c c %#c )c c c #)#c c
% c 'c  $#c %c % c  c 'c %c %$ %c c
$  $%c c )# c 2$c %$ %c c $  $%c c  c
%c2$c%c)#c#$c'c$c c%$c)#c%c $#c
%c$c c%$c $##c%c
1c 'c cc%c'c#cc c 'c$ 'c $c),c'##c)c%$#c$' %c
)c'c%$ cc'c$  $cc'c$'%cc
.c ##c $ 'c  %c '##c )c %c c c %c  c c c %#c  c 'c
 #ccc*' 'c$ 'c %cc
c
Rule 11.c Goods to be removed on invoice.-
c 9c& )#c%c'##c)c%c cc  ccc*'$c& c$%cc
 c%c )c'c*c c'c  cc'c$'5%cc%c c'c c c
c  'c $ 'c  c '##c #c )c $%c )c 'c ( c  c
#c
& cc'c7$%c c
#c & c) c'c cc%c c
'c  c
1c 'c  c '##c )c ##c $)%c %c '##c c 'c c $)c
% c #  cc%c%c c#cc c%$c2$c%c#$c
 c%c%c'c%$c)#c'c
.c 'c c'##c)c%cc# cc'c ##*cc#K!c
ccccccccccccccccc'c#c c)c,%cc-(A(96c;-c@S Lc
c 'c%$# c c)c,%cc 6(
 c;-c97- Lc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccGFc
c
c 'c# c c)c,%cc(6(
 c;-c77 77 c
<c -#cc c c c),c'##c)cc$cccc$#c'*c##*%c)c
'cc
c c
#c & cc'c $c
c c
#c
& cc'c cc)cc'c #c  c%c  $ c c 'c c
=c 'c*cc*,ccc'c c  cc'c
c7 cc
cc%$#c$'%c c'c$c'##c$' c 'c #c c'c c
),c) c)c)$'cc$c
Gc @ c ,c $c  c 'c  c ),c 'c #c $)c  c 'c c '##c )c
%cc'c7$%c c
#c & c'c$% c
Fc 'c c  c 'c $#c '##c #c p  c p   c c %c $#%c )c c c
c%#ccc %cc%#c
cccccccccccccccc !c ;c 'c $c  c 'c $#c I c c %#Jc %c I %c c
%#Jc'##c'c'cc%cc'cc
9"c
%c$#c1//1c
c
Rule 12.c Filing of return.-
cccccccccccccccc cc'##c $)cc'c7$%c c
#c & cc '#c$c
c'c c  %c)c  c)c'c@%c c%$ c%c#c c%c
%c'c#c $#c*'cc%c c'c #c c'c'cc*' 'c'c
$c#Kc
ccccccccccccccccc%%c 'c *'c c c c #c  c 'c &c $%c c   c
)%cc'c#$c c # ccc  #cc'c'##c #cc2$#c$cc
'c c  %c)c  c)c'c@%cc c%$ c%c#c c%c
%c 'c #c  $#c *'c *c %c  c 'c #c  c 'c 2$c c
*' 'c'c$c#c
c
Rule 13.c Duty on matches.-
cccccccccccccccc'c %$c c  'c '##c )c %c )c  &c c  'c )&c c ),#c c Ac

#c & c7c cc#$ccc'cc c%$c%c*'c$ 'c)&c
c ),#c c $%c c  ,c  'c  ,c '##c )c  ,%c )c 'c
$  $c c 'c $c $c  c %)$c %c '##c )c 'c $  $8c
%c#)#c%cc,c ##c'*c'c #c c 'c %cc'c ,c
c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccGCc
c
Rule 14.c Procedure for procurement of central excise stamps and maintenance of records
for production and removal of matches.-
cccccccccccccccc'c@%cc)c  c  c'c %$c c $c $c%c
%#c  c
#c & c 7c %c c c c %$ c c
#c#c%cc c%$cc 'c
c
Rule 15.c Special procedure for payment of duty.-
c 'c
#c Ac c )c   c  c'c%cc c c*' 'c
cc'##c'c'cccc'c%$c c& cc'c)c c$ 'c  c
cc)c#cc%$ c c$ 'c%c%cc$ 'cccc)c  %cc
'c %c   c $) c c $ 'c #c %c %c  #$%c 'c
#cccc#ccc)c  %cc$ 'c  c
1c 'c
#c Ac c #c   c )c   c 'c c  c ,c c
# c c#c c'c #c %$c cc c%$c'c)c c
c'cc)c##*%cc $c c #$c cc  c%$cc%c%cc
'cc %#c'c
c
Rule 16.c Credit of duty on goods brought to the factory. -
c 3'c c %c c *' 'c %$c '%c )c %c c 'c c  c #c ' c c
)$'c c c  c c )c !%c  %c ! %%c c c c 'c
c'cc'##c c'c $#c c$ 'c c c 'c %c%c'##c
)c #%cc,c
9"c %c c'c%$c%cc  c$ 'c%cc %cc
$c$%c'c
9"c
%c$#c1//1c%c$#c'c %c %cc'c
%c$#c
1c ( c'c cc*' 'c'c%cc$) %c) c)c%c%cc$c
c $  $c 'c $  $c '##c c c $c 2$#c c 'c
9"c %c
,c $%c $)!$#c c %c c c 'c c 'c $  $c '##c c %$c c
%c %c$%c$)!$#ccc'cc# )#cc'c%c c#c%cc
'c#$c%%c$%c$)! c1c c c.cc c<cc c<c c
'c cc'c cc)c
.c ( c 'c c c %  $#c c ##*c 'c c  c $)!$#c c %c $)!$#c 1c
'c c c  c 'c %c c )c !%c  %c ! %%c c c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccGEc
c
c'cc%ccc'c%c$)2$#c$) cc$ 'c %cc
c)c  %c)c'c
c
c
Rule 17. Removal of goods by a unit in the Free Trade Zone or by a Hundred per cent.
Export-Oriented undertaking or by a unit in the Special Economic Zone for
Domestic Tariff Area.-
c 3'cc%cc%c cc$ccc;c%cPccc'$%%cc c
&!%c $c c c $c c 'c 7 #c  c Pc c % c  c c
$ 'c#c'##c)c%c$%cc c)c ##*c'c %$c  %cc
$#cc%ccc cc%$c) c#c c%c)c%)c'c
 $c $c2$%cc)c%c c'c$c
1c 'c$c'##ccc'c c  %c)c  c)c'c@%cc
 $c #c c %$ c % c  c %c 2$c %c %c 'c %$c
%c
.c 'c $c '##c $)c c '#c $c c 'c c   %c )c   c )c 'c
@%cc'c7$%c c
#c & c*'cc%c c'c #c c'c
'cc*' 'c'c$c#c c c c'c%c%cc% c c
c
c
Rule 18. Rebate of duty.-c
ccccccccccccccc3'c c %c c &%c 'c
#c Ac c )c   c c
)c  c %$c %c c $ 'c & )#c %c c %$c %c c #c $%c c 'c
$  $c c  c  c $ 'c %c %c 'c )c '##c )c $) c c $ 'c
%cc#c cc%c $# ##c c$ 'c %$ccc)c  %c
c'c  c
cccccccccccccccc !I &Jc #$%c%c'%ccccc c$cc)%cc
'c %ccc ccc$#%ccc cc  c
c
c
c
c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccF/c
c
Rule 19.c Export without payment of duty .-
c c& )#c%cc)c&%c*'$cc c%$c cc  c c'c
%$ c c 'c $  $c c 'c *'$c c c 'c c c c )c
%c)c'c
c
1c c#cc)c%c*'$cc c%$c cc  c c'c%$ c
c'c$  $cc'c*'$ccc'cc c$cc'c$  $c
c c c%c*' 'cc&%ccc)c%c)c'c
c
.c 'c &c $%c $)!$#c c c $)!$#c 1c '##c )c $) c c $ 'c %c
 $%c%c %$ccc)c  %c)c  c)c'c@%c
c
Rule 20.c Warehousing provisions.-
c 'c
#c Ac c )c   c &%c 'c  #c  c #c  c c
& )#c%c c'c  c c%$ ccc*'$cc cc*'$c
c'c*'$c*'$cc c%$c
1c 'c  #c$%c$)!$#cc'##c)c#)#c$) cc$ 'c %c #$%c
#c %c c #c  #$%c #c *'c  c c 'c %c c
*' 'c 'c %c c c c 'c *'$c %c  $%c %c  %$c
 #$%c c 'c c #c c % 'c c  c  $#c %c
%#c c$ 'c%ccc)c  %c)c'c@%c
.c 'c)#c cc c%$cc'c%c'cc%c c'c  c
 c %$ c c c *'$c c c c *'$c c 'c *'$c '##c )c
$c'c c
<c ( c 'c %c % '%c c *'$c c !*'$c c c  %c c 'c
*'$c'c)#c cc c%$c'##c)c$c'c c
c
Rule 21.c Remission of duty.-
ccccccccccccccc3'ccc'*cc'c  c c'c
c'c%c'c)c#cc
%%c )c $#c $c c )c $%)#c  %c c c #%c )c 'c
$  $cc$ c c $cc c ,cccc ) c#c
'c c c 'c %$c )#c c $ 'c %c $) c c $ 'c %c c c )c
%c)c'c)c%cc*Kc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccFc
c
cccccccccccccccc%%c'c*'c$ 'c%$c%cc& %cc'$%c$c'cc c
'c$#c '##c 'c  cc  c c'c&cI
Jcc'c&c Ic
7$%c c
#c & Jc'c)c$)$%Kc
cccccccccccccccc%%c $'c 'c *'c $ 'c %$c & %c c '$%c $c )$c %c c
& %c*c'$%c c'$%%c$c'cc c'c$#c'##c'c  c
c c c'c&cI
Jcc'c&cIcc
c c

#c & c c'c $c
c  c
#c & c c 'c c c )Jc
'c)c$)$%Kc
cccccccccccccccc%%c#c'c*'c$ 'c%$c& %c*c'$%c c'$%%c$c)$c%c
c& %c c'$%c$c'cc c'c$#c'##c'c  cc c c
'c &c I
Jc 'c &c Ic Hc
c  c
#c
& cc%%#c
c c
#c & cc'c cc)cJc'c)c
$)$%c
c
Rule 22.c Access to a registered premises!c
c c   c *%c )c 'c
c c 'c )'# c '##c 'c  c c c
c %c $%c 'c $#c c 'c $c  c c $c c  $c
  c%c ' ,ccc)c cc $%c'cc c$c
1c c c '##c $'c c 'c   c *%c $%c $)!$#c c c #c c
%$# c c##c'c %c%cc%c)c'cc c $c c
 c c %c c c $ 'c $  $c c #c c %#c  c
'c%c #$%c$c%c #c%c
.c cc'##cc%%c,c#)#cc'c  c*%c$%c$)!
$#c c c 'c $%c c %$%c )c 'c
c c 'c
##c %c
$%cA#c c(%!c
c 'c %c%cc%c)c'ccc c$)!$#c1Lc
c 'c c$%cc  c c$%c  c1..@c c'c
c  cE=Gccc c
E=GLc%c
c 'c( !&c$%cc cc$%c c<<@c c'c( !&c cEGcc
<.c cEGc c'c $c c'c  cc$%ccc'c cc)c
c
c
Rule 23cc Power to stop and search .-
ccccccccccccccccc
#c & c -  c c  'c c  c c & )#c %c c
 c  c *' 'c 'c 'c c c )#c 'c 'c %c c )c %c *'c 'c
c c%c%$c
c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccF1c
c
Rule 24.ccc( cc
#c & c-  cc'ccc)#c'cc%c*' 'cc#)#cc
& c%$c)$cc%$c'c)c%c'cc'c%c%c*c%c*'c'c
c c %c'c%$c)#c'c'c
#c & c-  c c%c
c5c$ 'c%c
c
Rule 25. cc 7$) c c 'c c  c  c c 
c  c 'c  c  c c %$ c
$  $c%cc cc*'$ccc%c%#c:c
c cc& )#c%cc c cc c'cc c'c$#c
c'c  c$%c$%c'c$#Lcc
)c cc $c cc& )#c%c%$ %cc$  $%cc%c)c'Lc
c
 c c c 'c $  $c %$ c c c  c c & )#c %c *'$c
'c#%c c'cc   c2$%c$%c cGc c'c Lcc
%c
cc c'cc c'c$#cc'c  c$%c$%c'c
$#c*'ccc%cc c%$!c
cccccccccccccccc'c##c$ 'c%c'##c)c#)#cc   c%c'c%$ cc$  $cc
%cc c'c*'$ccc%c%#ccc'c cc)c'##c)c
#)#ccc#cc& %c'c%$cc'c& )#c%cc c c*' 'c
c c c'c$c %ccc #$ccc #$c)cc #$c cc
#$c%c'c)c %cc$cc'$%c*' 'ccc
1cc c %c $%c $)!$#c c '##c )c $%c )c 'c
#c & c -  c ##*c
'c #c c$#c$ c
c
Rule 26cc Penalty for certain offences.-c
ccccccccccccccccc c *'c  2$c c  c c c c c *c  %c c c
c %c ,c  #c ##c c $ 'c c c c 'c
c%#c*'cc& )#c%c*' 'c'c,*cc'ccc)#cc
#)#c c   c $%c 'c  c c 'c $#c '##c )c #)#c c c #c c
& %c'c%$cc$ 'c%cc$cc'$%c*' 'ccc
c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccF.c
c
Rule 27cc General penalty.-
ccccccccccccccccc) 'c c'c$#c'##c*'cc'c#cc%%c'ccc'c c
)c $')#c *'c c #c *' 'c c &%c c c '$%c $c %c *'c
  c c'c%cc c c*' 'c'c  cc %c
c
Rule 28cc Confiscated property to vest in Central Government.-
cc 3'cc%cc   %c$%c'c$#c$ 'c'c'##c'$ccc
'c
#cAc
1cc 'c
#c & c -  c %$%c   c '##c ,c %c '#%c c  c
'c'c   %c%cc-  c c# cc'c2$c c$ 'c
#c
& c-  c'##cc'cc,c%c'#%c$ 'cc
c
Rule 29cc Disposal of confiscated goods
cccccccccccccccc
  %c %c c  c  c *' 'c 'c c  c c c c c #$c  c
  c'cc)c& %c'##c)c#%c%%cc'*c%%c c
c$ 'ccc'c
cc% c
c
Rule 30. Storage charges in respect of goods confiscated and redeemed.-
ccccccccccccccccc( c'c*c c'c%c'c   c c*' 'c'c)c%$%%c& c'c
c c c c c #$c  c   c 'c c )c 2$%c c c $ 'c c
'ccc)c%%c)c'c%$% c  c
c
Rule 31c Power to issue supplementary instructions!c
cc 'c @%c c 'c
' c
c c 'c
c c $c *c
$ c%c cc  %#cc$##c c c*'c'c
c c'c c%c'c$#c
c
Rule 32. Restrictions on removal of goods.-;
cc 9*'%c'c %cc'c$#cc%c'##c)c%c cc
 c c c *'$c )*c 'c c %c c c  c 'c $#c
@$%ccc7$#c@$%c c'c
#cAcc'c$c c'c
#cc c'c %$ c c'c$c c'c#c c c ; c@##ccc
@##c ccc c cc'c%$cc'c cc)c%c1<//c'$c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccF<c
c
%'cc'c%cc*' 'c$ 'c@$%c; c@##ccc'c@##cc'c c
c)cc%cc%$ %c$#!c
cc 'cc'c)%cc c'c
c$%c$)!$#c1c%c
cc c# 7c c$ 'c#cc'c c )%c)c  c)c'c@%c
'c )c %c )c 'c c c 'c
#c & c -  c %c $ 'c c
# c 'c )c  ,*#%%c )c 'c ) c F//c '$c c 'c *,c %c
%#c %c$ 'c%Kc
cccccccccccccccc%%c 'c c $ 'c # c c 'c #c  c %c *' 'c c c c
& cccc c'c%cc'##c)c ,*#%%c$#c'cc
%c %c #c %c )c 'c
c c 'c )'# c c #%c
*'c
cccccccccccccccc 
c ;c'c $c  c 'c $#c I%Jc  #$%c %c *' 'c c c
c& cccc c'c%cc
1cc 3'ccc%ccc%c cc  ccc*'$c$%c$)!
$#c c 'c c ,c c # c c 'c )'# c c *c c 'c
c
$%,c c c %$c c 'c ' %c c  c c 'c c )c # )#c c $ 'c
%c*'c  c c'c%c%#c ##*c'c%cc*' 'c'c@$%c
; c@##ccc'c@##cc'c c c )cc%cc%$ %c%cc
#c *'c $ 'c %c c 'c
c c   c %c '$c 'c

cc c'c %cc cc&%cc'c$)# ccc
c%cc'c#c c$ 'c%c
c
Rule 33.c Transitional provision.-
ccccccccccccccccc  c  $#c$ c%c%c%c cc'c%c$%c
$%c'c
#c & c9c1c$#c1//c)c'c@%c'c
' c
cc
'c
c c
#c & c%cc  ccc'c1C'c%c c;)$c1//1c
'##cc'c&ccc#c%c c*'c'c$#c)c%%cc)c#%c
%c$%c$%c'c %cc c'c$#c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccF=c
c

 c!c=c

GUIDANCE NOTE ON ACCOUNTING TREATMENT FOR


MODVAT/CENVAT (REVISED)

5.1 INTRODUCTIONc

1c'cA$% c9cc $cc c - "c*c c$%cc  'cECCc


'cA$% c9c*c%ccH$#cEE=cc*c c&c c - "c
%c7 'c
c #c %c 'c A$% c 9c c %c c *'c 'c $ c  c %c  $c
7%%c 7c 1c c U"#$c  c (Uc *' 'c 'c c c   c c  c  c
 $c %c  c c c  c <EEEc %c c %c c $c 'c %c
A$% c9cc$%cc$c c'c#cA$% c9c$%ccH$#cEE=c%cc
  c c  c  c  $c c - "c c  $c %c )c c c  c
#c c EEEc 3'c 'c $)$c  c 'c - "c
%c 7 'c *'c
9"c
%c
7 'c * c <1///c 'c %c A$% c 9c #c %#c *'c  $c c c
 c c'c#c7 'c

5.2 OBECTIVEc

2.c 'c ) c  c 'c A$% c 9c c c %c $% c c  c  c  $c c
- "0
9"c %c 7#c $c  c - "c %c
9"c %c  'c c
) #cc$c' c  cc)c%cc
#c & c cE<<c
#c & c
$#cE<<c9  c%c
 $#c$%c cccc c%#c c'cc c
- "0
9"c 7 'c A$% c c  $c c & c %$c c %%c c 'c
A$% c 9c c  $c c c & c $c *' 'c 'c )c %c %c $%c
#c

5.3 MODVAT CREDIT SCHEME (Upto 31.3.2000) ± SALIENT FEATURESc

3c % %c"#$c%%%c&c - "c7 'c##*cc %c c  %c%$c%c


c  %c$c$%cccc#cc$  $c c  %c #c& )#c%cc)c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccFGc
c
$#%c c c  c & c %$c c  c  c $ 'c %c 'c 7 'c c %c
%c c #c 'c  2$%c %$#c 7  %c %$c c #c c %c %c c
$#c%$c%cc c c%$c%cc& c%$c%%#c& c%$c$%c
%%#c $c  c & c &#c %c &#c  #c  c EFCc c #c %%#c & c
%$c$%c%%#c $c c & cA%c c7 #c( c cE=Fc

4.c - "c7 'c*c%$ %ccECGc  c c.CGc*'cc*cc%$ c'c


 %c  c c%$c(##c'c7 'c*c ccc# cc'c

c c #%c #c c #%c c  c $c %c #c %Lc %c
c
c $c  c $c c c c #c c $  $c  c #c %c *c #c c
$#c c%$c %c cc c& c%$cc # c c$ 'c #c%c(c
'c *%c #c  c $c %c #c %c *c #c '$'c c c c
#c c$c*cc#cc

5c7  c%c'c c)c%cc'c - "c7 'c%c'c c c'c


7 'c 'c )c &%%c %)#c 7#c $c  c 'c 7 'c c $%c
' c

6c 'c 7 'c #c c $c U($c $c


%c 7 'Uc %c #c %c U
#c
A%c $c
%c7 'Uc

Input Duty Credit Schemec

7cc#cc'c7 'cc %cc$#c=Fcc=FHc c'c


#c & c
$#cE<<c'c7 'c c$c%c #c%$ c # )#c$%cc c'c'%c
 c 'c
'c  c 'c
#c & c  c  c EC=c 'c #c $c  c 'c ($c $c

%c7 'ccc ##*Kc

c 'c 7 'c c c #c *'c & c %$c c )#c c #c %c '$c
- "c %c c)c#%c c  c'c #c%cc&%c c%$ccc
')#cc#cc c%$c*c'c7 'cccc c'c #c%c
c#c&c c%$c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccFFc
c
c
#c)*c$c%c #c%ccc2$%cc%$c %cc c
 c c $c )$'c c 'c  c c )c $#%c c c  c %$c c c #c
%$ c $  $%c c 'c  c c  c 'c $c c c $%c c c c #c c
$  $c c'c #c%$ c

cc$  $cc2$%cc%)cAc1.cc $c $c*'cc$c2$#c


c/Bc c'c#$c c$cc##c %c$c%c c'c  c c
)*,c'c%c$cc#)#cc %cc$c c %0 #c%cc'c
 c c )*,+c c c c # c  c $ 'c  %0 #c %c c
)*,+cc cc%c)c'c
c*'c  %cc%c
'c%)%c$cc#c#)#c c%$cc%$c)#cc$ 'c$c
c##c %c$cc %c) ,c*'c  %cc

c( c c$cc$%cc$  $c c #c%$ c*' 'c%cc c%$c


#)#c c #c 'c *' 'c c ')#c c %$c $  $c & c c   %c
cc2$%cccc$c2$#ccCBc c'c c c%$ cc ')#cc
%$cc'cc c # c c$ 'c%$ c

8c 7$c
$c c c  c $%c c 'c c  c

c $c c c ( 'c ,c 6%c


UEEEc 1c 6c .=.Lc % %%c c CEEVc '%c  c c $c 'c 7 'c #c
& c c'c% cc%$ %c)#*Kc

U c ccpc c  c cc cpcccp  c c ccc c
c  c c c pc c c  c c pc c c  c c c  c  c
pp c c p c c   c c  c  c c  pc 
c c  c
 c c c c  c c c pc c c pc pc c  c c c c
 c 
cc cc ccc  cc  ccc ccc c
cc c  cccc cccc cccccc
 c ccc   c ccc c
ccccc cc cc
 cc cc c cc ccccp  c ccpcc
pc c  c  c c p  c  c   c c c c c c pc c  c
 c 
cc c cc  
c c   c cc cc cc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccFCc
c
ccccpc ccc cc cc cc cc cc cccc
c c c c  c c  c p   c  c c c  c c pc c c c
 c  c 
c c  c pc c c  c c  c c c c c  c
p   cccc cccp c
Uc

Capital Goods Duty Credit Scheme

9ccc#cc'c7 'cc %cc$#c=FWcc=Fc c'c


#c & c
$#cE<<c'c#c $c c'c
#cA%c $c
%c7 'ccc ##*Kc

c'c7 'c c  %c #c%c$%cc'c  c c'c$  $cc


#cc'c%$ c c  %c #c%$ Lc

cc$  $c*$#%cc)c#%cc'c - "c %cc #c%c$#c


'c #c%cc##%ccc'c cc)c$%c c$  $c c& )#c
%cc'c  c c'c$  $Lc

cc$  $c'ccKc

c #c - "c %c c  c  c %$c %c c #c %c c c 'c
$#Lc

orcc

)c #c% cc%$c#c$%c7 c.1c c'c( !&c  c


EGc c #c %%$ c  c %$c #c )c *c  c $c &%$c $%c
c c c'c( !&c cEGcc'c cc)Lc

c c $  $c c #c - "c %c  c 'c %$c #c  c #c %c
c c #c%cc 2$%cc#c'!$ 'cc#cc c  %c
%$c c %c )c $  $c 'c % #c c #c %c $#c c c 'c  c
c) cc c c#0'!$ 'cc#c##cc'c cc
)cc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccFEc
c
GENERALc

10c'c#c #c $c#cc($c $c


%c7 'c%c
#cA%c $c

%c7 'ccc)#*Kc

c c $  $c c 2$%c c #c *'c $c  %$#c 2$c c
 $#c #c  c % #c %c  c  c c  c  c $c %c
)# c  c $c %c #c %c c ;c A!1.c c (c %c A!1.
c c (c
 #c(cc#c2$%cccc#%cc - "c %cc c
 c$c%c #c%cc;cA!1.cc((c%cA!1.
cc((c #c

c 'c c cc #c c $#c  c - "c %c Ac c '*c
*%cc%c c#c c$$#%c %c)# c c   c%$ c

c
'c $%c c%$c %c c c##*)#c& c c c c&c c%c c'c
$  $cc$)#cc$#c%$c %c*%cc c& c%$cc # c
 c #c%c c'c  c

5.4 CENVAT SCHEME (EFFECTIVE FROM 1.4.2000) ± SALIENT FEATURESc

11c % %c"#$c%%%c&c - "c 'c'c)c# %c)c


#c"#$c%%%c
&c 
9"c 7 'c *'c   c c <1///c 'c c c %c c *#c %c
$#c=Fcc=Fc
9"c7 'cc cc'ccc - "c7 'c& c
'ccc#cc'c'c*'#cc 'c c$c%c #c%cc%c
cc$%c
9"c7 'c'c c c'c7 'c c#c&%%c c'c##c $c
& c 'c 7%c #c -#c %c #c %c   %c #c %c & c 2$c c
# c$%cc  cc %cc'c7 'c

12c  %$#c #  c 'c )c %$ %c %c 2$c  c #c % #c 'c
)c%%c*'c

13.c 'c c %  c )*c - "c %c


9"c 7 'c c c #c c #c
%c'c
9"c %cc c c #c%c %ccc  cccc cc
ccc  #ccc##*%cc)c,c#c cc$cc& %c  c c c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccC/c
c
'c%$c%cc$ 'c #c%cc'cc  #cc'c)# c c
9"c %c
c)c,ccc  #cc$)2$cc'c  #ccc*' 'c'c #c%c
*c %cc'c  c c'c$  $c%%c #c%cc##cc'cc
%c $c  c 'c $  $c  c #c %$ c c $ 'c $)2$c c 'c %c  c
c %c $c c c # )#c c c c %c  c   c %c
  c #c %c %c ##c $%c  c %c GC/1c %c $)!'%c GC//c  c
c7 '%$#c c'c
#c & c c cEC=c c'ccc%c*'$c$c

14c -$%c )# c c - "c


%c  $c c ##*%c c )c  %c c 'c

9"c
%c $c%c$#5%ccc'c
9"c7 'c

5.5 ACCOUNTING TREATMENT IN CASE OF INPUTS USED IN OR IN RELATION


TO MANUFACTURE OF FINAL PRODUCTSc

15c(c'c#'c c'c) c $c c+ - "0


9"+c% $%c)ccc)c%c
'c - "0
9"c c c  %$c *')c 'c $  $c c $#c %c c
  %c%$cc$cc%$c)#cc #c%$ c $c %c,cc$cc c
'c$c c! c#)#cc'cc c& c%$cc'c #c%$ c

16.c 7  %c %$c %c c $c c )c %)%c c c c  $c c
- "0
9"c
%c  )#c ($c  $c c %c *'c - "0
9"c
%c c  $##c $#%c c c  c & c %$c c #c %$ c c
 $c c *##c )c 2$%c c %$c 'c & c %$c %c $c  c - "0
9"c

%c )#c($c $cc'c $c%c c0c c& c


%$cc #c%$ c(c'c c'c$ 'c c c'c$c*$#%c)cc c'c  %c
%$cc$c' c'c$c $%c%c'cc c$c*$#%c)c#$%cc
'c )c  c $ 'c c c  c 'c   %c %$c c $c 'c %)c )# c c
- "0
9"c
%c  )#c ($c  $c '$#%c )c '*c c 'c c %c
$%c'c'%cR% +cc

c##$c c'c)c'%cccc &#cQ8c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccCc
c
17c(cc )ccc2$c'c ##*c'c cGc%cFc%#c*'c + c c
+c %c + c  c $ '+c  c  $c 7%%c 7c 1c %c c "#$c  c
(c$%c)c'c($c c
'%c $c c(%c

UGc 'c c  c c '$#%c c ##c c  c $ 'c c  c c
%c 'c c  $%c c )c 'c c c 'c c # c %c
%Uc

UFc'c c c$ 'c c c'c$ 'c c #$%c%$c%c&c'c


'c'c$)2$#c )#c)c'cc c'c&c$'c 'c
*%c %c 'c &%$c % #c )$)#c c 'c  2$c %c % $c
)c%$c%*) ,c%c'c#ccc%%$ %cc%c'c c c
$ 'Ucc

 $#ccc%cc'c'c#%cc+ c c$ '+c %cc


*' 'c #c 'c %$c 'c c )c  #$%%c c c  c $ 'c *' 'c c c
$)2$#c )#c)c'cc c'c&c$'c7 c'c  %c
%$c c $c c #)#c c ! c c 'c & c %$c c #c %$ c c c
%%c c'c$c c%$c )#c c&c$'cc

18c c 2$c c c c c *'c 'c + - "0


9"+c %c '$#%c )c ,c  c
% $c% cc c   %c%$c c $cc %c #c'c'c' #c
 c c'c%c %cc'c $#c  c c $ccc $c c$ 'c
%c%%ccc)#c c cc'c%c% $ccc#c%c

Change in Accounting Policyc

19.c (c c *'c c *c  $c c - "c %c c $c c  % c
*'c 'c *'#c  #$c '%c c 'c  %c #c  %%c c 'c #c
%cEE=c c'cA$% c9cc $cc c - "c'c*##c'cc
'c 'c '%c  c  $c c  % c *'c 'c Gc  c 'c A$% c 9c
 %#c$ 'ccc*##c'cc%$c'c$c cc ,cc c c'c
 $c %c  c c c  c #c c EEEc c $ 'c c *c c 'c 'c c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccC1c
c
 ,c'$#%ccc'c$c*' 'c*$#%c'c)c%cc'%c'c'%c$%c
c 'c Gc  c 'c A$% c 9c )c ##*%c 'c $#%c )c %c )c %$c 'c
$c cc  ,c c c c'c $c%c  ccc c#cc
EEEc )c 'c $c c 'c )# c #c c 'c - "c %c #%c  $c ;$'c c
$c2$#cc'c)# c cA1.ccc'c - "c %c )#cc
 c  c 'c $c $ '%c c 'c #c c '$#%c )c  %c c - "c
%c
 )#c $c*'cc %c%$cc'c$c cc ,c c'c
 %c %$c 'c - "c
%c  )#c  $c '$#%c #c c c 'c
$c *' 'c *$#%c 'c )c %c c '%c 'c '%c $%c c 'c Gc  c 'c
A$% c9c)c ##*%cc&#c##$c'c 'cc $c# c'c)c
cc &#cQ@8c

c % #$c c c  $c 7%%c 7c =c 9c  c c 6c c 'c %c
c %c (c %c
'c c  $c # c c #c 2$%c c )c %c c 'c
 #cc c 'cc $c# c

Accounting Treatment ± ob-workc

O cpcc cc  c cc  c  c c   ccc


c  cc c c

20.c (c c c *'c c c c $c c $ 'c c c c ##c  %c c c c
# c$%c'c  c c'c$c ccc c %cc c
$cc'cc c c$  $c c #c%$ c'ccc2$%cc
%)c - "c
%ccAc1.cc $c $c*'cc$c2$#cc/Bc c
'c #$c  c $c c ##c  %c $c c 'c c c )c 'c %c %)c c c 'c
$c c%c%cc#)#c c %cc'cc c$c c%$#c %c%cc'c
 c*'c'c )%cc'c%c%cc#c#)#c c%$cc%$c
c c'c%ccc %c) ,cc'c  c*'c'c )%cc#c( c'c
$cc%)%cc - "c
%ccAc1.c'cc'$#%c)c $%c cc
c %c %c '$#%c )c %)%c c c c  $c *'c c  #$c c
U - "cc
%c cH)*,c $Uc%c %%ccU - "c
%c )#c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccC.c
c
 $Uc'c%c$c'$#%c)c %%c%cU - "c
%c )#c $Uc
'$#%c )c %)%c c 'c c  c  c  c %$#c  %c %c c 'c  c *'c 'c
 )%cc#cc c%$c c%$c c'c%ccc %c) ,cc'c  c
*'c 'c  )%c c #c 'c 2$c  c %)c 'c )c %%c *'c $%c
„ !"Oc#p
c

O cpcc cc  c cc cc c cc  c


  c

21ccc c c $c cc #c c c%0c cc #c
%$ c c )c *,c )c %c c )c 2$%c c #c - "0
9"c %c c $ 'c
$c%c% 'c%$c#)#cc # c c #c%$ cc)'# c c'c #Lc'c
*'c c'c $c%c #c%$ c $cc)c c'c #c(c$ 'c c'c
c'$#%cc'cc c,c -" 0
9"c %c%)ccc $c
c U - "0
9"c
%c  )#c  $Uc %c 'c  $c c )c %%c *$#%c
%%c$c'cc c)*,c*'c'c #c( c'ccc2$%cc)c& c
%$c)$%cU & c $c $Uc'$#%c)c %%c( cc'c'c'%c& c%$ccc
)c%cc'c #+c $cU #c $Uc'$#%c)c %%c7##cc c
c& c%$c%cc # c c #c%$ c'$#%c)c%)%ccU & c $c $Uc
%c c #c c c U #c  $Uc %c %%c c U - "0
9"c
%c
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5.6 ACCOUNTING TREATMENT FOR MODVAT CREDIT IN CASE OF CAPITAL


GOODS USED FOR MANUFACTURE OF SPECIFIED GOODSc

22.c (c c c c %c c #c - "c %c c #c %c )$#c c
 $c c *$#%c )c  c 'c ##*c 'c #c #c c 'c
$c*'ccc#c c - "c %cc #c%c

23c  $c 7%%c 7c /c c R $c c ;&%c +c $%c )c 'c ($c  c

'%c $c c(%cc!#cccEcc ##*Kc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccC<c
c
U'c c ccc c &%cc cc$ 'c c #$%cc%$c
%c'c! $%)#c&cc#c%cc% #c)$)#c c c)c'c
c c c *,c %c c c %%c $Lc c %c % $c %c )c c
%%$ %cccc'c$ 'c Ucc

- "c %c c )c %%c c c'c $c cc $%)#c&c' c - "c
%c'$#%c)c%$ %c c'c$ 'c c c #c%c  %cc

24.c (c *c  c 'c )c 'c   %c %$c c #c %c '$#%c )c %)%c c c
 $cc - "c
%c )#c
#cA%c $c-c $#c$#c'c
 $c*##c)c%$%cc& c%$cc #c%$ c %#c'c$ 'c c c
'c #c %c *$#%c )c c c 'c   %c %$c c #c %c'c $%$%c )# c
%cc'c - "c
%c )#c
#cA%c $c cc'$#%c)c'*c
c'cc%c$%c'c'%cR% +c

25c - "c %c c  c  c #c %c'$#%c )c  %c c 'c ),c c  $c
*'c'c ##*c %cc %Kcc'ccc#%cc'c - "c %c
c c 'c $#c %c c 'c c c )#c c 'c 'c - "c %c *$#%c )c
$#%c

5.7 ACCOUNTING TREATEMNT FOR CENVAT CREDIT IN CASE OF CAPITAL


GOODSc

26.c 'c $c  c 'c


9"c
%c c  c  c #c %c c 'c c c 'c  c
- "c
%c*c'c
9"c
%cc c c #c%cc##*%c cc
$cc& %c  c c c'c%$c%cc$ 'c #c%cc'c  #ccc
*' 'c 'c %c c  %c c  c %c 'c )# c *##c )c ##*%c c 'c $)2$c
c(c c'c %c   %c cc1=c)cc c%c'c c% %cc
,c
9"c %c'cc$c c
9"c
%c'$#%c)c%%$ %c c'c c c
#c %c'c $c  c
9"c %c ,c c 'c  #c c c *' 'c %c c
 %c '$#%c )c %)%c c c c  $c c U
9"c
%c  )#c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccC=c
c

#c A%c  $Uc %c )# c c )c %)%c c 'c c  $c c
U
9"c
%c  %c  $Uc (c 'c $)2$c  #c c *'c )# c

9"c %c c #%c  c 'c c %$c c 'c c '$#%c )c %c c
$c  c
9"c %c #%c  c '$#%c )c %%c c U
9"c
%c  %c
 $Uc*'cc %c%)ccU
9"c
%c )#c
#cA%c $Uc

5.8 ACCOUNTING TREATMENT WHERE CAPITAL GOODS ARE ACQUIRED ON


LEASE OR HIRE PURCHASEc

27c - "0
9"c %c c#)#cc'c #cc'c*'c'c #c%c'c
)c  2$%c c #c c 'c $ 'c 'c  $c c c 'c %c c % )%c
' c

28c(c'c),c c'c#c*'c'c  cc#c c'c  %c%$cc


#c%c'cccc#c'$#%c)c'*cc$ 'c cc c'c  %c%$c
c 'c #c %c 'c   %c %$c c #c %c *' 'c *$#%c )c #%c  c c
- "0
9"c %c )c 'c #c '$#%c )c  %%c %c % #%c #c c 'c
%$c )#c c'c#c'c*##cc cc cR $c6c+cc*c
 c'c% c c'c %cc%$ %c)#*c c'cA$% c9cc $c
c6c$%c)c'c($c c
'%c $c c(%Kc

U p pc$ c%p &c'ccc'c#cc'c'c#ccc c)c


2$%c c ,c & #$%c c c  c %c &c c )c %c )c %c )c
)$)#cc'c#c'c*'c'c%$#c#$Uc

3'c 'c   %c %$c c #c %c %c c c c  c 'c  c
c %c 'c #c c 'c %$c % #c c 'c $#c )$#c 'c c
%cc)c %%cc'c),c c'c#c

(c 'c ),c  c 'c #c - "0


9"c %c  )#c c 'c #c c
 2$%cc#c'$#%c)c%cc'cccc %%ccc1<c%c
1Gc)c& c'c'c c c'c#c#%c #cc%c% ccc
 $%cc'c),c c'c#c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccCGc
c
29c
#cc 2$%cc'c$ 'c'$#%c)c %%c%c% #%ccc 'c#$c
c 'c#$cc c - "0
9"c %c )#cc'c),c c'c'c'c'c
 $ccc#cc - "0
9"cc'c),c c'c'c'$#%c)c'c
c c  c 'c c 'c )c  2$%c c $'c $ 'c )c 'c  %c  $c
c c 'c ),c  c 'c 'c '$#%c )c %c *''c c c 'c   %c %$c c 'c
#c %c c c  c 'c  c c (c 'c ),c c 'c %c c c 'c
  %c%$cc #c%c cc c'c'c$ 'cc%c'c ) c c
- "0
9"c %c c #)#c c 'c 'c 'c %c '$#%c ),c 'c #c c 'c
#c $c #$c c'c  %c%$cc'c #c%c*c*'c'c  %c
%$cc'c #c%c%cc cc c'c  cc%c'c'c% #c
$c'c#)#cc c' c'cc%cc)c %%cc'c),c c'c%c

5.9 REVIEW OF BALANCES IN MODVAT/CENVAT CREDIT RECEIVABLE


ACCOUNTSc

30c@# cc - "0


9"c
%c )#c $ccc)'c$c%c
#c%c'$#%c)c*%cc'c%c c'cc%c ccc $%c'c'c)# c c'c
- "0
9"c %ccc#,#cc)c$%c c'c #c $c c)$c*'c c
)#cc'c*'%c'c'cc c *%c$ 'c& c %cc'c & c
$#c'c!$)#c& c %c'$#%c)c%$%cc'c $c'c 2$ c*$#%c
)c 'c 'c )# c  c 'c - "0
9"c
%c  )#c  $c c 'c  #c
 $cc)c#*c'c'c %c#)#ccc'c - "0
9"c
%cc
(c $ 'c c c c   #c c *$#%c 'c c )c %c % c 'c $c
%$%c c 'c c  ,c c ,c c 'c %  c )*c 'c )# c %c 'c %  c
)*c 'c  #c  $c %c 'c %c #)#c c c 'c & c c c )c
&#%cc$)2$cc#c

31.cc'c)c%$c#%cc$c %c'$#%c)c%cc'c*c#cc$c
$ 'c  $c 'c   c  c 'c *$#%c )c c  c 'c c  c $ 'c %c ')c c
 c 'c c  c $c c 'c $c  c  $c c $c %c #$c  c
#c ,c3'cccc)#cc%)cc% c'c& c %ccc $#c#cc
#c c#c$ '%c$ 'c& c %cc)c%cc'cc$ 'c c
*c #c c c#%cc - "0
9"c %c%$c'c cc!
c)c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccCFc
c
)c 'c %$c  c & c %c #%c c #c %c '$#%c )c %c c 'c  %c

#c A%c  $c 'c & c - "0


9"c %c 'c #%c c % %c
*' 'c#cc &%cc 2$%c'$#%c)c%%%cc'c c c'c#c &%cc;c
 $c $c % c c 'c %c $%c % )#c $c '$#%c )c
%%c #cc'c%$#c$ $#c# c c'cc(c c'c &%ccc#c
&c 'c #c $c '$#%c )c *! c c 'c  c %c #c  $c c  #c
 %cc - "0
9"c %c %c'$#%c)c%c &%c!*cc
'c #c Ac c (c #c c #c %c 'c 'c &%c c 'c  $c
c c'c& c - "0
9"c %c*$#%c )c'ccc%ccc.c
)c (c c ' c %)#c 'c - "0
9"c
%c  )#c 
#c A%c
 $cc%c#c c &%cc%c'c #c%c

 c;c #c%c 2$%cc#c'c$c c& c - "0


9"c %c'$#%c
)c*! ccc!c)c#c*'c'c#c#c

32c 3'c c c c %$c 'c c c c #%c 'c 'c c %c %c $) c c
*' 'c'c) c c - "0
9"c %cc#)#c'cc)c #%c*'ccc
c)c )#c c # cc*'c'c$cc%%ccc'c$  $c c
#c %$ c c 'c #c #c %c  'c c )c $c c $c c 'c $  $c  c
#c %$ c c %$c '$#%c )c %c c 'c  $c c c $ 'c %c
*' 'c c )c #%c  c c  %%c c c .c c c $c %c .c )c %c  c c
#c%c

5.10 ACCOUNTING TREATMENT FOR DUTY DEMANDS PAID BY DEBIT TO


MODVAT/CENVAT CREDIT BALANCE ± INPUTS AND/OR CAPITAL GOODSc

33c c c c 'c c % 'c & c %$c %%c %c )c
#c & c
c cccc)c*c c%)cc - "0
9"c %c)# cc
'c c $c c c #c %c (c 'c c 'c %$c %%c c %c $c  c 'c
- "0
9"c %c )# c '$#%c )c %)%c c c  $c %%c $c
'c $c  c %%c %c %c '$#%c )c c c - "0
9"c
%c  )#c
 $c;c&#c  c'c%$c%%ccc& c%$cc '%c%c'cc
'$#%c )c %)%c c & c %$c  $c ( c c 'c 'c '%c c c c %##* c  c
- "0
9"c %c,cc$ 'c c*c#c%$c'cc'cc'$#%c
)c%%%cc'c c c$cc%$cc'c c*$#%c'cc)c%c*'#c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccCCc
c
#$cc c$c( c'c%$c%%ccc%##* c c - "0
9"c
%cc c c$ 'c  %cc#cc'c $cc*$#%c%%cc
*''c 'c %c $c c $%c c c #)#c c  ,c ( c 'c c $%c 'c
%##* c'$#%c)c%)%cc& c%$c $c%c%cc&c c'c $cc
( c *c #c c ##c #c c  ,c %$c %%c '$#%c )c %%%c c 'c c  c  ,c  c
$c

5.11 VALUATION OF INVENTORIES OF INPUTSc

34c'cc c$c'$#%c)c#$%ccc c$c%$c(c'c*%c'c  %c


%$c%cc$c*##cc cc c'c c cc@# cc - "0
9"c

%c  )#c ($c  $c '$#%c )c '*c c 'c @# c 7'c $%c 'c '%c
R% +cc'cc%c

35c(cc cR$+cc)c&%c c& c%$cc'c'%c c'c$#cc


)c 'c c &c c & c %$c %%c 'c  )%c  %$c c )%c
7##! #c$#c*'ccc'c&%c cc#c$#c'c$c c c'c
#c  c & c %$c (c $ 'c  $ c #c #$c $#c c %c 'c c  c
ccc)c#%cc'ccc$) cc'c  %c%$cc$c# c3'c
$ 'cc%c c'c%#c*'ccc#)#c$%c'c
#c & c$#ccc
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 %c$#c'c#$c'$#%c)c%cc'c $#c c #$c c& c%$cc

36.c(cc c'ccc c$c c)c)%c c% c$ cc c'c


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)c)#cc%c'c2$%c% $c(c$ 'c c*'cccc)#c c'c)$cc
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'$#%c)c#$%c #$c c'c  %c%$cc$c

37.c ( c c $c c $%c c 'c %$ c  c c 'c c #c %$ c c  c *' 'c c
& )#c*'#c'cc'cc ')#cc& c%$cc ')#cc#cc c%$c
%c c c  c 'c $c c c %c 'c c c  c $c '$#%c )c
#$%ccc c$c%$c*c cccc)c%c'cc c
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cccccccccc c c
 c c cc cccccccccccccccccccccccccccccCEc
c
%c'cc c$c$)#c c #c%$ cc ')#cc%$c'$#%c)c#$%cc
'c $#c c #$c c& c%$c

38c3'#c#$cc c #c%$ c'c#$c c$c'$#%c)cc c'c%$cc


$c'cc'c$ 'c cc%$ %c)c'c - "0
9"c %c

5.12 VALUATION OF INVENTORY OF CAPITAL GOODSc

39.c (c  c #c %c '$#%c )c #$%c c  c - "0


9"c %c ,c c
#c%c(c'c*%c  %c%$c%cc$ 'c #c%c*##c c cc c
'c c

5.13 EXAMPLE µA¶c

Illustration of Accounting for MODVAT/CENVAT Credit on Inputsc

'c##$cc)%cc'c ##*c$Kcc

c 'cccc ,c c/c$c$ '%ccc/0!cc$c & c%$c%cc


'c$c*c>cc10!cc$cc

c//c$c c*c#cc$ '%ccc/0!cc$c#$cc10! c& c%$c


ccc10!cc

c F/c $c  c *c #c c $%c c c  c #c $  $c  c c
c##c'cF/c$cc#%cc'cc'c)# c</c$cc$  $%c%c
#%cc'c$)2$ccc

c'c$  $%c cc#%ccc c cc=0!cc$c #$%c& c


%$c.0!cc$cc

c - "0
9"c %cc#)#cc'c*c#c$ '%c%c c)c! c
c'c& c%$c)#cc'c #c%$ cc

c
c cc%cc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccE/c
c
The accounting treatment as per para 16 will be as below:c

Profit & Loss Accountc

Particularsc Unitsc Ratec Amountc Particularsc Unitsc Ratec Amountc

c cc cc cc @c7#c F/c =c /=/c


-c
7 ,c c

*c /c /c //c cc cc cc cc


#c

c //c /c ///c cc cc cc cc


$ 'c c c c
 c *c /c /c //c
#c

6Kc 7 ,c </c /c <//c F//c cc cc cc


 c *c
#c

c & c F/c .c cc 1/c cc cc cc


$c

c Ac cc cc </c cc cc cc cc


 c

cc cc cc cc /=/c cc cc /=/c

NOTE:c

c -c )# c  c 'c - "0


9"c
%c  )#c  $c c c 1/0!c
1c @%c '*c  ,c  c *c #c c c <//c 'c @# c 7'c *$#%c #c  # c
U - "0
9"c
%c  )#c  $Uc c c /0!c c $c  c 'c ##*c
Kcc

cccccccccc c c
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c $ 'c0 c c ///c
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@c'c$ 'c c//c$ccc/0!c#$cc10!c c& c%$cc c c*' 'c'c


cc#)#cc #c - "0
9"c %c

)c & c $c0 c c 1/c


cc c - "0
9"c
%c )#c0 c cc 1/cc

@c'cc c& c%$c$c c - "0


9"c %c#)#cc'c cc

Balance Sheetc

Liabilitiesc Amountc Assetsc Amountc


cc cc
$cc6c%c% c cc
cc cc „ c O  c<//cc
(c c*c#cc
cc cc @$ c  c O  cc/c
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'c c )# c  c c  c *c #c %c - "0


9"c  )#c
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5.14 EXAMPLE µB¶c

Illustration of Change in Accounting Policy

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*'#c #$c'%c c $c c - "c %c'c $cccc
'c'%c*$#%c)cc ##*Kc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccE1c
c
Profit & Loss Accountc

Particularsc Unitsc Ratec Amountc Particularsc Unitsc Ratec Amountc

c cc cc cc @c7#c F/c =c /=/c


-c
7 ,c

 c *c /c 1c 1/c cc cc cc cc


#c

c //c 1c 1//c cc cc cc cc


$ 'c cc c c c
*c /c 1c .1/c
#c

6Kc 7 ,c </c 1c <C/c cc cc cc cc


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#c

*c F/c 1c C</c cc cc cc cc


#c
$%c

6Kc F/c 1c </c cc cc cc cc


- "c c c c

%c F/c /c F//c

c & c F/c .c 1/c cc cc cc cc


$c

c Ac cc cc </c cc cc cc cc


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cc cc cc /=/c cc cc cc /=/c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccE.c
c
Note:c

c -c @# c  c - "c


%c #%c 0
c *c 9#c
1c@%c'*c  ,c c*c #c c<C/c'c )# c cU - "c
%c
#%c $Uc*$#%c)cF/cc$c c'c ##*cc

c c 'c c *'c %c c #%c  c %c %$%c c 'c & c %$c *' 'c ) c
)#Kc

& c $c0 c c c1/c

c - "c
%c#%c0 c cc c1/cc

@c'cc c& c%$c c'c - "c


%c#)#cc'c c

)cc'cc%cc'c&c*c#cc'c)c $%cc'c%$ Kc

- "c
%c#%c0 c c c</c

c #c
$%c cc c</cc

@c'cc c'c - "c %c#%cc#c $%c

Balance Sheetc

Liabilitiesc Amountc Assetsc Amountc

cc cc Current Assets, Loans and cc


Advancesc

cc cc c
$ccc cc

cc cc (c c*c #c <C/c

cc cc 6Kc - "c
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cccccccccc c c
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c

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- "c %c )#cc c c$c$ '%c

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9c(c'c c'c ##*c$#cc*##c)c%c7ccEKc

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%c#%c0 c c cF/c

cc c-c7 ,c cc cF/cc

@c'cc ,c%$%c)c'c)# c c - "c


%c#%c $c

((c - "c
%c )#c0 c c c/c

cc c-c7 ,c cc c/cc

@c c $c 2$#c c'c )# c  c Ac 1.c c c 'c - "c %c
 )#cc c c$c$ '%c %cc - "c
%c )#c $c

cc$#c c)cc'c $c cc ,c%c - "c


%c )#c0 c
*$#%cccc<//cc<C/!F/!/c%c /c #c(cc )c%c'c'c
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c
c
c
c
c
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c
c
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cccccccccc c c
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 c!cG
VAT, CST & CENVATc
c
6.1 DIFFERENCE BETWEEN VAT AND CST
%c'c
7c c'c&cc ## %cccc c$ 'cc#c c%c' c'c
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'c&c'c'c)c%c#c
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%c "c #*c c 'c %#c c &c c 'c #c c $ 'c  c %c 'c $)2$c
%#cc&cc'cc c'c#$c%%%c$c$ 'c%c'$c'c&c)$%cc'%c
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c
c'c cc c#c'c#$c c%cc//c'c&cc'cc1=Bc' c'c
c "c *$#%c )c 1=Bc c 'c  %c 'c  c #c 'c #c #$c c 1/c %c 'c &c
'c c =Bc 'c &c 'c c c )c %c c c c c =Bc 'c $c &c c =Bc 'c
%#c*##ccc %c c c 'cc#c c1=B!!cc=Bc!1=Bc' c1=Bc*##c)c
'cccc'c'%c 'c c#c'c#c#$cc=/c%c'c&cc'ccCF=Bcc
'c#cc'c&c%ccCF=Bc'c($c&ccCF=Bc #8ccc %c c %c
'cc#MccCF=Bc!=BcXc.F=Bc' c.F=Bc*$#%c)c'cc"c'cc
'c"cc%cc'c#cc&c$%c'c#c&cc
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cccccccccc c c
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cccccccccc c c
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c
6.2 DIFFERENCE BETWEEN VAT AND CENVAT

c
"!c"#$c%%%c&c
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c'c#c *cc%$ cc
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c 'c c ##c c 'c c c &c %c 'c &c ##c c &c #c c 'c #$!
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c

c
c
c
c
c

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccECc
c

 c!cFc
QUOTES & UNQUOTES FOR VAT IN INDIA
c
(%c#*cc#%c c+S 7+c%c+9-+c'c%$ c c"cc(%c#c  %c*'c
% c*c c% c#c  'c%cc %c'c*cc;*c2$%c"c
c(%cc'cc*% $#c%c% $#c c'c&c&cc-'c2$%c'c
c c*c$#c%c*%c'ccc,c'c$'c6cc)c c$c *c
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c
Chidambaram to state governments
U-c )'# c  c 'c
c (c c c $##c c *'c $c c $c %c '#c c
)$#%cc $c*,cc%c#c##c)#Ucc

Ramesh Chandra, secretary of the federal panel


"c *##c )c #$ '%c *c#c c %c 'c c )#$#c c 2$c  c % c Ucc

Praveen Khandelwal, secretary-general of the Confederation of All India Traders


U3c *##c c $c $c c c *'c c (c c c %c c %c $c c $Ucc

Former finance minister Yashwant Sinha


U'c #c c $c #c ##c $c c #c %c c '*c %c *'c c %c c
'c$c #c& Ucc

Onkar S Kanwar, president, FICCI


U3c$c'c@Hcc %c'c% c%c*,c*'c'cccc#c
 'c#c*'#c %c*'c'c
ccc$c'c$c%  $#Ucc

Bengal finance minister Asim Dasgupta, Kajariac


U'c ; c c    c 'c c  c ##c  c c 'c c  c Ucc

cccccccccc c c
 c c cc cccccccccccccccccccccccccccccEEc
c
World Bank country director Michael Carterc
Uc 'c "c *%c &c c c c ,c &c c %  $#c Ac )c 'c
& c  c 'c $c "c 'c %c )  #c %c #%c c $c )$ Ucc

Ramesh Chand, a protestor


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"Ucc
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Raja Chelliah, the architect of the VAT system
U(%c c )c #)##c c c c $##c %c ,c  c ##c c %c 'c "#$c
%%%c&cUcc
c
Sushil Kumar Gupta, a shopkeeper in the upmarket Defence Colony shopping complex in
south Delhi
U3cc##cc"Ucc
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Vijay Goel, president of the Confederation of All India Traders and a member of the BPcc
U3cc c'cc)cc'c&c*' 'c*##c !&c*'c #c#c&c%c
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cccccccccc c c
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CONCLUSION
c
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c c %%c )c 'c cc'c
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*'cc cc%c&c
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#%c) ,c c'c&c$'c
c c  c ##c 'c c *c $c *' 'c ,c 'c %$ c  c "c  #c c (%c
(%$c * 'c c 'c 'c "c c  c   %c #c c c  c 'c  #c
#%c c c 'c $c (c $#%c c  c '#c %%c 'c  #c %  c )#c
%c 'c $c %c c )c ## %c $#%c  $##c c #*c  c 'c  #c %  c
)$%c c'cc
'c (#c c ;$%c ( ;c c c !$#c 3#%c  c -$#,c #%c
c#cEc&%cc  cc(%+c#c  #c%  c!cc/cc c c'cA c
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c'c *%c
c cc; c c'c#%c$)%c'c$c
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7c*' 'c''c*c%c%cccc#%c*'c&c
'c %c &c *c &%c c $%c c c #c #c &c c 'c c c
$#ccI&cc&Jcc  %cc  c'c'$#%cc)c%)#c$%c'c"c
7##c 'c
c  c
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c 'c *c %c $c 'c
% %%c c 'c $c %c $c #c c "c #,c c )#'c c
  c  c c ## c $%c &c %$ c c c  c #c %c
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cccccccccc c c
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 c4cEcccccccccccccccccccccccc
SUGGESTIONS

c The vat tax is simple in nature of calculatingcc%c'c


7c c'ccCc
c c&c!cBc1Bc<BcCBc/Bc1Bc1/Bc%c1=Bc*c$%c
'cc"cc'c*$#%c#c)c1cc c&c<Bcc% #%c
%c%c/!1Bcc9ccc
1c The vat tax is fair and equitable for all. "c%$ c'c$ c&cc
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&cc'c $##c c c'c%c#%c%c'*c#cc'c##c c
$%c)c'c
<c The vat tax has regressive naturec) $cc)$%c ##c%#cc
'cc c'ccc#,#cc%cc c'c c'c'c##c
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=c The vat tax favors the capital intensive firm.c"c# cc'c% c c
 c&cc'c#)$!c c %cc'c #!cc c
 c'cc c#$c%%%cc##c ccc c'c c'ccc
#c)#c c#)$!c c%c%$c
cc

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc/1c
c
BIBLEOGRAPHY
c
1.c 'K00*** * ' c
2.c 'K00***% c
3.c 'K00****#%$ 0%&'c
4.c 'K00***#$%  0c
5.c 'K00***&<% 0c
6.c 'K00*** )% c
c

cccccccccc c c
 c c cc ccccccccccccccccccccccccccccc/.c
c