TNVAT – Short Guide to Tamil Nadu VAT

TNVAT – Short Guide to Tamil Nadu VAT

In Tamil Nadu, Value Added Tax (VAT) is governed by the Tamil Nadu Value Added Tax Act, 2006. The purpose of Tamil Nadu Value Added Tax Act, 2006 is to levy tax on the sale of goods in the state of Tamil Nadu on the basis of value added to such goods at each and every stage of sale of goods and on the purchases of certain goods in Tamil Nadu in particular circumstances.

TNVAT Registration

TNVAT registration is mandatory for any person or business (irrespective of type of business entity) if purchases and sales of goods within the State of Tamil Nadu and the total turnover in the preceding year is greater than or equal to Rs.10 lakhs. Also if the total turnover in the preceding year is greater than or equal to Rs.5 lakhs, then TNVAT is mandatory. Irrespective of the quantum of turnover, TNVAT registration is mandatory for:

  • Jewellers or Bullion Traders
  • Factors, Brokers, Commission Agents
  • Mercantile Agents
  • Non-Resident Agents or their Principal
  • Auctioneers
  • Importers
  • Exporters
  • Dealers making purchases against C Form

TNVAT Return Filing

TNVAT Return must be filed monthly. VAT return in Tamil Nadu can be e-filed or filed manually. Persons or entities having a turnover of Rs. 2 crores  or in the previous year are required to file their monthly vat return on the 20th of each month for the previous month. Those having a turnover of more than Rs.2 crores are required to file their monthly TNVAT monthly return on the 22nd of each month for the previous month. Further, those dealers who are not liable to pay VAT tax should file their return annually before the 20th day of may.

TNVAT Payments

The end customer pays the VAT. Therefore, it is the responsibility of the dealer to collect VAT tax on his/her sales and remit the same with the Sales Tax department before the due date. Dealers having an annual turnover of Rs. 2 crores or more must make their TNVAT payment/deposit through the electronic VAT e-payment facility before the 22nd of each month. All others are required to remit the TNVAT payment or deposit by the 20th of each month.

Assessment of Account

Section 63(1) of the Tamil Nadu Value Added Tax Act, 2006 enables provisions to ensure that each and every dealer as liable to pay tax under the Act, shall make available to the assessment authority any account, to register, to record or any other document relating to the everyday transaction of his business.   Rule 6 makes provision regarding the type of accounts to be maintained by the dealers.

Maintenance of Accounts

According to Rule 6 of Tamil Nadu Value Added Tax Act, 2006 provisions are for maintenance of accounts made for the purposes of Tamil Nadu Value Added Tax Act, 2006. Rule 6(1) provides that every registered dealer shall maintain true, correct and complete in any of the languages specified in the Eighth Schedule to the Constitution of India or in English showing a record of the goods produced or manufactured, bought, sold, delivered or supplied.

Purchase and Sales Account

The Rule 6(2) of Tamil Nadu Value Added Tax Act, 2006 provides that every dealer shall maintain accounts recording purchases and sales. The purchase account as maintained by registered dealer according to Rule 6(2) (b) will mention importantly the following:

  • Value of purchase of the goods that are exempted
  • Value of the goods as purchased from registered dealers with tax rate
  • Value of the goods purchased from unregistered dealers with tax rate
  • Value of goods purchased as prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957
  • Value of goods purchased from outside the State of Kerala without the issue of ‘C’ Forms
  • Value of goods purchased as specified in that of Second Schedule
  • Value of goods received on stock transfer from principal or head office for sale situated out of Kerala

Production cum Stock Account

Rule 6(3) of Tamil Nadu Value Added Tax Act, 2006 makes provisions that each and every registered dealer who manufactures or produces shall maintain a production–cum-stock account.

Every registered dealer who is a manufacturer or producer and purchases industrial inputs to utilize them in the manufacture of taxable goods shall issue a certificate to the seller with the details of his Taxpayer Identification Number, the details of purchased goods, details of manufactured goods and the name and address and seller’s Taxpayer Identification Number.

Sales through Agents

The rule 6(5) Tamil Nadu Value Added Tax Act, 2006 provides that every registered dealer, who effects sales through the agents shall maintain the accounts of goods that are consigned on each and every occasion on an agent-wise basis.

He shall also maintain the originals of the written contract that are entered into between him and the agent and office copies of the authorization letter, consignment notes or dispatch advice that are sent to the agent in relation the goods dispatched on each necessary occasion.

The purpose of Rule 6(6) (a) provides that every commission agent, broker, delcredere agent, auctioneer or other mercantile agent shall maintain relevant documents related to sales.

Need assistance with TNVAT? You can find VAT Consultants through IndiaFilings.

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