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KARNATAKA VAT ACT AND OTHER ALLIED ACTS- CHANGES EFFECTIVE FROM
1.4.2010.
1. All goods which were subject to 12.5% would now be subject to tax of 13.5%.
2. Even the rate of tax in respect of the works contracts which were hitherto subject to
3. There is no change in the rate of tax under composition scheme. It would remain 4%
4. All goods which were subject to tax earlier at 4% would now be subject to tax @ 5%.
Only the declared goods specified in 3rd schedule will continue to be subject to tax of
4% only. Items like steel will continue to be subject to tax of 4% only. However, the
classification problems could come up and hence, in such cases, kindly have your
classification of the goods reviewed, if you consider that the goods are covered in 3rd
schedule.
which were earlier subject to tax of 4% will now be subject to tax @ 5%.
6. Specified goods sold to the canteen stores department earlier subject to 4% would
Even pharma products will suffer tax of 5% for the manufacturers. Only exception is
the hands of a wholesaler and retailer for a period of three months only. In other
words, the rate of tax would be increased to 5% w.e.f 1.7.2010 even in their hands
though, the goods had suffered tax of 4% earlier. This would apply even in the case
of goods on which MRP based tax is paid as those goods were not under exemption
scheme. Please note, this Notification shall not be applicable in case of manufacturers
and on goods purchased in the course of inter-state trade and held in stock but is
restricted only to the aforesaid goods which have been subjected to KVAT at 4 % at
the time of their purchase and held in stock. Further, this concession shall be allowed
subject to the condition that the dealer claiming it shall have to discharge the burden
of proof that such goods were subjected to VAT at 4% on their purchases and held in
stock.
7. Basic exemption limit has been increased to Rs.5 lakhs, below which one need not
8. Turnover limit for COT dealers has been increased to Rs.25 lakhs.
10. Optional facility of payment of VAT on MRP basis which was hitherto available for
pharma and medicinal preparations has been extended to other products also.
11. Authority for Advance Rulings is proposed to be constituted with a view to clarify
12. Filing of electronic return and e-payment is also proposed which would be made
14. Luxury Tax on room rents has been increased to 8% for rooms having rent from
15. Electric Generating Sets below 15KVA also will be subject to tax of 5%. Earlier, DG
sets above 15KVA was subject to 4%, which is now increased to 5%.
16. Rate of tax on all kinds of scraps and waste materials would be 5%. However, iron
and Steel scrap being declared goods would continue to be subject to 4% tax.
17. All kinds of masala powders whether mixture of spices and other materials will be
subject to 5% tax.
Entry Tax:
2. Provision made for payment of entry tax on sugar by dealers to sugar factories at the
Thanking you,
Yours truly,
Chartered Accountants