TAX REMISSION-BACKGROUND

The VAT regime does not envisage any tax

concession or tax exemption as both the
concessions and the exemptions go to break the
VAT chain. Maintenance of VAT chain is a
must for sustainability of this tax regime.
Hence there is no provision of either any tax
concession or tax exemption in the VAT
legislations
The Govt. of J&K was of the opinion that it shall
be difficult for the Industries sector in the State,
which is still in a nascent stage to sustain itself in
the absence of any sort of tax incentive and
there is a need to provide incentive to the
Industry in some form under the Value Added
Tax regime, in a manner as does not break the
VAT chain. With this intention, The Jammu and
Kashmir Value Added Tax Act, 2005 was
accordingly amended to incorporate a provision
relating to tax remission i.e. Section 79-A.
Accordingly the Govt., issued a
Notification SRO- 91 dated 15th March
2006 followed by Notification SRO–176
dated 31st May 2006 ordering for
remission of tax in respect of small,
medium and large scale industrial units.
The provisions of the remission
scheme are plain and simple.
PRICE ADJUSTMENT & TAX REMISSION
Price adjustment has to be made in the
selling price.
This price adjustment shall be equivalent
to the amount of VAT chargeable on the
sale of the finished product.
VAT to be charged on the net selling price
(arrived at after making the price
adjustment).
It is mandatory to mention the amount of
price adjustment in every sale invoice.
The following illustration shall make the provisions relating to
calculation of price adjustment , charging of VAT & claiming tax
remission clear.

CALCULATION OF PRICE ADJUESTMENT FOR CLAIMING TAX REMISSION

COMMODITY ‘X’ TAXABLE @12.5%

Sale Price = Rs. 10,000

 Price adjustment @ 11.111% (as per formula)
 Calculation = 10,000 x 11.111 = Rs.1111.10
100
 Net selling price = Rs. 10,000 – 1111.10 = Rs.8888.90
 VAT chargeable = 8888.90 x 12.5 = Rs. 1111.10
100
 Gross selling price = Rs. 8888.90+1111.10 = Rs. 10,000
 FORMULA FOR CALCULATING PRICE ADJUSTMENT

WHEN THE VAT RATE IS 12.5%

VAT rate 12.5%

Unit Price (U.P) = 10,000
VAT Rate (V.R) = 12.5%
U.P- [ (100/100+V.R) x U.P]
= 10000 – [(100/100+12.5 ) x 10,000 ]
= 10,000 – [ 100/112.5 x 10,000]
= 10,000 – 8888.89
= 1111.11
%age of Unit price 11.111
CALCULATION OF PRICE ADJUESTMENT FOR CLAIMING TAX REMISSION
COMMODITY ‘Y’ TAXABLE @4%

Sale Price = Rs. 10,000

Price adjustment @ 3.846% (as per formula)
Calculation = 10,000 x 3.846 = Rs.384.60
100
 Net selling price = Rs. 10,000 – 384.60 = Rs. 9615.40
 VAT chargeable = 9615.40x 4 = Rs. 384.60
100
 Gross selling price = Rs. 9615.40+384.60 = Rs. 10000
 FORMULA FOR CALCULATING PRICE ADJUSTMENT
WHEN THE VAT RATE IS 4%

VAT rate 4%
 Unit Price (U.P) = 10,000
VAT Rate (V.R) = 4%
U.P- [ (100/100+V.R) x U.P]
= 10000 – [(100/100+4 ) x 10,000 ]
= 10,000 – [ 100/104 x 10,000]
= 10,000 – 9615.40
= 384.60

 %age of Unit price 3.846

 Relaxation of conditions and extension of date
pertaining to sales made by industrial units
during 2005- 06

• In respect of sales conducted during 2005-06 some

conditions relaxed and remission allowed, industrial
unit to furnish an attested affidavit affirming making of
price adjustment.
• Date for filing of prescribed “tax remission claim
form” and the prescribed “declaration for tax remission
claim” along with purchase and sale statements in
respect of 1st, 2nd, 3rd and 4th quarters of 2005-06 has
been extended up to 31st July 2006 .
 TAX REMISSION CLAIM FORM

1. Name & Address of the Industrial Unit ……………………….………………………………………………….

2. Taxpayer identification number (TIN) …………………………………………………...
3. Circle & Division in which registered…………………………………………..……….…..
4. Date of filing the quarterly return …………………………………………………….…..
5. Tax period to which tax remission claim pertains ………………………………..…
6. Quantum of taxable sales for the tax period ……………………………………….
7. Total amount of price adjustment for the tax period made in selling price ………………………

8. Total amount of tax collected for the tax period………………………………….……...

9. Amount of tax remission claimed ……………………………………………………..

10. Whether declaration form as per Annexure II enclosed ..………………....

Place : Signature………………………….
Date: Name ……………………………...

  Status ……………………………..
Seal ……………………………….
 DECLARATION FOR TAX REMISSION CLAIM
 
 I ………………………………………..……………….…. Proprietor/Partner/Director of
M/s……………………………………………… located at ……………………………… having TIN
………………………………… do hereby certify that the total number of employees working in
my industrial unit is ……………………..….. . I certify that I have provided employment to
……………number of locals (constituting …….. of the workforce) in my industrial unit as
per list attached in terms of Govt. Order No. 265-IND of 2005 dated 27-10-2005.
Place : Signature………………………….
Date: Name …………………………….
Status ……………………………
  Seal …………………………….
CERTIFICATE
It is hereby certified that the Declaration made hereinabove by the industrial unit is true
and correct.
No: Signature …………………
Dt: Seal………………………
General Manager
District Industries Centre .…….
Competent Authority of Directorate of Handicrafts/Handlooms
 PROCESSING CASES FOR TAX REMISSION
 Assessing Authority to prepare details of tax remission claims within one
month of the last date prescribed for filing of quarterly returns in the
prescribed format.

 The tax remission claim proffered by the industrial unit to be verified by the
Assessing Authority .

 After processing the cases of eligible industrial units, tax remission orders to
be passed within three months.

 Commissioner Commercial Taxes to get 25% of all the tax remission claims
for each quarter verified by the Dy. Commissioner Commercial Taxes (Audit).

 Any industrial unit found to have proffered an incorrect tax remission, to be

provided an opportunity of being heard by the Assessing Authority before
denying any tax remission.

 Industrial units to maintain correct and regular accounts of purchase

including capital goods and raw material, production and sale of goods
 NON-ENTITLEMENT TO TAX REMISSION

• In case no price adjustment is made there shall be

no entitlement to tax remission.
• Input Tax Credit not available to industrial units
claiming tax remission.
• When an industrial unit ceases its manufacturing
activity for a tax period and when it recommences the
same, needs to be brought to the notice of the Assessing
Authority else no tax remission shall be allowed for that
particular tax period.
• Any industrial unit found guilty of importing
finished products or disposing off raw material in a
manner not envisaged in the registration certificate shall
not be entitled to tax remission.
• Any industrial unit found guilty of an offence under the
below mentioned provisions of The Jammu and Kashmir Value
Added Tax Act, 2005 not entitled to any tax remission for the year
in which such offence is committed:
Section 66(6) – Keeping unaccounted goods in business premises
Section (67) – Importing goods not supported by documents or
imported on fake or false documents.
Section 69(1) f -- Concealing turnover or furnishing inaccurate
particulars thereof.
Section 69(1) g – Preventing or obstructing inspection, search or
seizure.
Section 69(1) h – Charging of tax on sale of goods in
contravention of the provisions of the Act and not depositing the
same.
Section 69 (1) k – Failing to issue sale invoice or issuing a fake
sale invoice.
Section 69 (1) l – Abetting or aiding a dealer in concealing his
turnover or evasion of tax.
 No tax remission available in respect of industrial units
manufacturing following goods:          

 Repacked goods
 Spices in all forms
 Indian made Foreign Liquor, Beer, Rectified Spirit,
Methylated Spirit
 Wooden Shooks
 Bricks and Tiles
 Arms and their accessories and ammunition.
 Copper utensils manufactured by mechanized units
    Soft drinks
 Tea (processed/unprocessed)
 Edible oil
 Screen-printing of glazed tiles             
 Roof trusses
 Cuttting and stitching of door mat out of coir, jute and
décor(wall to wall)
 Cutting of marble/granite
 Repair and servicing of Automobiles
 Sweetmeats (excluding toffees, candy etc.)
 Corrugation of galvanized sheets
 Cycles/Tricycles
 Cured skins
 Roasted peanuts
 Sheet metal items including trunks, suit cases, paties, buckets,
cans, bukharies, dustbins, hamams, steel tankers, shovels,
karaies and drums
 Televisions, Air conditioners, Refrigerators and Washing
Machines, when assembled and manufactured by the I industrial
units located in the State and sold under the brand name(s) of