© 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated...
© 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated...
© 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated...
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Clarifications on value added tax with regard to Andhra Pradesh state reorganisation

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With regard to the imminent bifurcation of the state of Andhra Pradesh into two states – Telangana and Seemandhra, with effect from 2 June 2014, Frequently Asked Questions (FAQ) have been recently released at a meeting of the tax authorities with the representatives of trade and industry, organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry, at Visakhapatnam and Vijaywada, with regard to the VAT changes emanating due to the said bifurcation.

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Clarifications on value added tax with regard to Andhra Pradesh state reorganisation

  1. 1. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG FLASH NEWS KPMG IN INDIA Clarifications on value added tax with regard to Andhra Pradesh state reorganisation 2 May 2014 Background With regard to the imminent bifurcation of the state of Andhra Pradesh into two states – Telangana and Seemandhra, with effect from 2 June 2014, Frequently Asked Questions (FAQ) have been recently released at a meeting of the tax authorities with the representatives of trade and industry, organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry, at Visakhapatnam and Vijaywada, with regard to the VAT changes emanating due to the said bifurcation. Aspects clarified The following aspects have been clarified:  Exemption from Central Sales tax on the movement of goods between Seemandhra and Telangana for five years, and reduction of tax rates would be addressed as a policy decision only by the respective State Governments after 2 June 2014.  The old Tax Identification Number (TIN) would be mentioned in the VAT 200 return for the month of May 2014, covering the transactions for the tax period 1 May 2014 to 1 June 2014, and has to be filed on or before 20 June 2014.  Except exporters, the dealer has no option to claim refund of excess input tax credit as on 1 June 2014, but to mandatorily carry forward such input tax credit unless the dealer files a revised monthly return for the month of March 2014 and claims refund of excess input tax credit as on 31 March 2014.  All the pending refund claims as on 2 June 2014 would be paid by the concerned assessing authority of the state under whom the dealer has to file returns/pay taxes in the new state(s) on or after 2 June 2014.  Form “C” not obtained as on 2 June 2014 for the earlier transactions to be obtained with the old TIN.  New Form “C” and other statutory Forms would be issued for the state of Telangana for the transactions on or after 2 June 2014.  No input tax credit would be allowed on goods purchased before 2 June 2014 with the old TIN and received after 2 June 2014.
  2. 2. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.  All advance rulings issued prior to 2 June 2014 would be valid even after 2 June 2014 in both the states.  Pending applications for Advance Rulings as on 2 June 2014 shall be transferred to the respective states based on the TIN of the applicant dealer.  Vehicle detention will be a decision at the discretion of the authorised officer at the check post.  If the registration of a vehicle in the state of origin is less than 15 months from the date of such registration under the Motor Vehicles Act, 1988, entry tax would be applicable on the inter-state movement of such vehicles between Telangana and Seemandhra. Our comments With only 31 days remaining before the proposed bifurcation of the state of Andhra Pradesh, it is imperative that industry and trade analyse the possible impact on their business models and revisit transaction structures to galvanise themselves into action with a clearly laid-out timetable for the rollout of the new VAT regimes for Seemandhra and Telangana. For example, the industry should proactively follow up with the tax authorities for obtaining Form “C” for the transactions for the period prior to 2 June 2014. The industry should also explore methods to address issues such as admissibility of input tax credit on goods purchased before 2 June 2014 with the old TIN and received after 2 June 2014.
  3. 3. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2014 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity“ are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. www.kpmg.com/in Ahmedabad Commerce House V, 9th Floor, 902 & 903,Near Vodafone House,Corporate Road, Prahlad Nagar, Ahmedabad – 380 051 Tel: +91 79 4040 2200 Fax: +91 79 4040 2244 Bangalore Maruthi Info-Tech Centre 11-12/1, Inner Ring Road Koramangala, Bangalore 560 071 Tel: +91 80 3980 6000 Fax: +91 80 3980 6999 Chandigarh SCO 22-23 (Ist Floor) Sector 8C, Madhya Marg Chandigarh 160 009 Tel: +91 172 393 5777/781 Fax: +91 172 393 5780 Chennai No.10, Mahatma Gandhi Road Nungambakkam Chennai 600 034 Tel: +91 44 3914 5000 Fax: +91 44 3914 5999 Delhi Building No.10, 8th Floor DLF Cyber City, Phase II Gurgaon, Haryana 122 002 Tel: +91 124 307 4000 Fax: +91 124 254 9101 Hyderabad 8-2-618/2 Reliance Humsafar, 4th Floor Road No.11, Banjara Hills Hyderabad 500 034 Tel: +91 40 3046 5000 Fax: +91 40 3046 5299 Kochi 4/F, Palal Towers M. G. Road, Ravipuram, Kochi 682 016 Tel: +91 484 302 7000 Fax: +91 484 302 7001 Kolkata Unit No. 603 – 604, 6th Floor, Tower – 1, Godrej Waterside, Sector – V, Salt Lake, Kolkata 700 091 Tel: +91 33 44034000 Fax: +91 33 44034199 Mumbai Lodha Excelus, Apollo Mills N. M. Joshi Marg Mahalaxmi, Mumbai 400 011 Tel: +91 22 3989 6000 Fax: +91 22 3983 6000 Pune 703, Godrej Castlemaine Bund Garden Pune 411 001 Tel: +91 20 3050 4000 Fax: +91 20 3050 4010

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