Last updated: December 17th, 2019 5:18 PM

Maharashtra VAT - MHVAT Guide

The purpose of Maharashtra Value Added Tax Act, 2002 is to consolidate and amend the laws in relation to the levy and collection of tax on the sale or purchase of certain goods in Maharashtra. In this article we look at aspects of Maharashtra Value Added Tax Act, 2002 relating to VAT bill, composition scheme according to fixed tax rates, return forms and tax payment and eligibility and conduct of works contract scheme. Click here to know more about VAT registration in Maharastra. 

VAT Bill in Maharashtra

According to Section 86(6) of the Maharashtra Value Added Tax Act, 2002 it is required that  every registered dealer issue, optionally, either a tax invoice or bill (or) cash memorandum for each and every sale he has made. The dealer who is choosing to issue tax invoice must conform to the requirements as prescribed in Section 86(2). The dealers, who have chosen composition scheme according to section 42(1), 42(2) or 42(4) related to Maharashtra Value Added Tax Act, 2002, are not required to issue a tax invoice. These dealers may issue a bill or cash Memorandum. A bill or cash memorandum must be serially numbered, dated as well as signed by the dealer or his servant or manager. This bill or cash memorandum must contain the particulars as may be required or prescribed. It will also contain a declaration as provided in Section 77(3) related to Maharashtra Value Added Tax Act, 2002. A duplicate copy of all these bills/cash memorandum or tax invoice is necessary to be preserved for a three year period from the end of the year in which sale has taken place. Click here to know more about creating an invoice.

Composition Scheme in Maharashtra

The section 42 of the Maharashtra Value Added Tax Act, 2002 provides for composition schemes for different classes of dealers, as may be brought to notification by the State Government in a timely manner. The dealers who choose such composition schemes with reference to Maharashtra Value Added Tax Act, 2002 will pay tax at the rates, under such conditions, as stand to be prescribed in the scheme.

VAT Return Filing in Maharashtra

According to Maharashtra Value Added Tax Act, 2002 from the date of 1st April 2009, all dealers, whether required to file VAT returns on a monthly, quarterly or six monthly basis, they have to submit their returns in only an electronic format. There are however separate return forms as that may be prescribed for various categories of dealers. A dealer has to use a suitable form as may be applicable to him. All these forms have to be submitted in an electronic manner within the prescribed date that is stated as due.

Works Contract 

There is no separate Act that governs the works contract transactions as all such transactions are now taxable as sales under the terms of Maharashtra Value Added Tax Act, 2002. The rate of tax, on such sales of goods, utilized in the execution of works contract and shall remain same as may be prescribed in the aforementioned schedules with reference to the respective goods. Nevertheless the sale price of such goods has to be determined according to the provisions contained in Rule 58 of the Maharashtra Value Added Tax Rules, 2005. According to Maharashtra Value Added Tax Act, 2002 therefore the value of the goods, at the time of the property transfer in the goods that are involved in the works contract execution, has to be adjudged by effecting the following deductions from the value of entire contract as far as the amounts related to the deduction are related to the works contract: –

• Labor and service charges for the purpose of execution of the works contract.
• Amounts paid by means of price for sub-contract to sub-contractors.
• Charges for the purpose of planning, designing and the architect’s fees.
• Charges for obtaining on hire or as the case may be otherwise, the machinery and tools for the works contract execution.
• Cost of various consumables such as water, electricity, fuel utilized in the execution of works contract, that property in which is not transferred in the process of execution of the works contract.
• Cost of establishment of the contractor to the degree to which it is related to supply of the said labor and services.
• Other similar expenses relevant to the supply of labor and services, where the labor and services are following the transfer of property.
• Profit as earned by the contractor to the extent it is applicable to the supply of said labor as well as services.