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| Corporate practice bd |
What
is VAT?
VAT
is an indirect tax that the consumer pays to the government through a
registered person.
The
tax levied on the actual addition of each value level of the supply by
adjusting the material tax as opposed to the tax payable on the supply is the
value added tax or VAT of that level.
Suppose
a product is bought for Rs. 1,000 and sold for Rs. 1,500. The purchase of that
product included VAT at Rs. (Account: 1000 * 15/115 Similarly, if the product
is sold at Rs. 1,500, it will include VAT of Rs. 195.75.
Since
the product is sold at Rs. 1,500, the actual addition will be Rs.
VAT payable on Rs. 1,500 is Rs.
195.75
VAT included in Rs.1000 is
Rs.130.43
VAT payable on net Rs.500 is
Rs.75.22
(Account: 50015/115)
Seller's accounting method =
(1,50015 / 115) - (1,00015 / 115)
= 195.75 - 130.43
= 75.22 rupees
Key Principles of Value Added Tax and Supplementary Duty Act, 2012
Value Added Tax and Supplementary Duty Act, 2012 has been formulated based on
some basic principles. The VAT authorities have to keep these rules or policies
in mind for tax assessment. The rules on which the authority determines the tax
are considered to be the policy of the tax. The principles or rules that have
been followed in the new VAT system. These are as follows:
(1)
Principles of Neutrality:
Neutrality
is one of the principles of the Value Added Tax and Supplementary Duty Act,
2012 or the new VAT Act. Equal opportunities have been created for all traders.
The main goal of the new law is to create a level playing field so that
everyone has equal access to business opportunities in the same sector. This is
the principle of neutrality of the Value Added Tax and Supplementary Duty Act,
2012.
Since
all the activities depend on online, no one has to go to the Musak office
anymore. All work can be done while sitting in the workplace of the business.
As a result, the Muscat administration and businessmen will not recognize
anyone. As a result, there will be no opportunity for mutual communication and
facilitation. Because they do not know anyone, everyone will fulfill their
responsibilities in accordance with the rules of neutrality.
(2)
Efficiency policy:
As the activities of the Value Added Tax and
Supplementary Duty Act, 2012 are all online based, the efficiency and speed of
execution will increase. The tax-to-GDP ratio will increase. As the
productivity of Bangladesh VAT is much less, its increase has also been
followed. The use of technology will result in modern revenue collection. Under
the new law, since everything depends on online, daily revenue information will
be available at the end of the day. Any information regarding import and export
will be available from anywhere at the end of the day.
Definition of value added tax
Phrase
Some phrases in the law or rules are used more than once in more than one place
in a specific sense. That is why such titles are defined at the beginning of
the law. To understand the law and its process, one has to read the law and the
rules keeping in mind the meaning of that kind of title.
Definitions
under the law
(1)
"non-resident" means a person who is not a resident;
(2)
"offense" means any offense referred to in Sections 111, 112, 113,
116 and 116;
(3)
"exempted supply" means the exempted supply referred to in section
26;
(4)
"exempted import" means the exempted import referred to in section
26;
(5) "money" means any legal tender in Bangladesh or any other country.
It
will also include the following documents, namely: -
(A)
negotiable instrument;
(B)
bills of exchange, promissory notes, bank drafts, postal orders, money orders
or equivalent documents;
(C)
credit card or debit card; Or
(D)
supplies provided by account debit or credit;
(6)
"economic activity" means any activity conducted regularly or
continuously for the purpose of providing goods, services or real estate; And
(A)
It shall also include the following activities, namely: -
(Ii)
whether the business is a profession, a scholarship, a means of earning a
living, the manufacture of goods or an undertaking of any kind for profit;
(Ii)
supply any goods, services or property by lease, license or similar means;
(E)
any one-time commercial activity or enterprise; Or
(6)
any work performed at the beginning or end of such activities; However:
Definitions under Rules
(a) "Act" means the Value Added Tax and Supplementary Duty Act, 2012
(Act No. 48 of 2012);
(B)
"import value" means the value determined in accordance with sections
25 and 25A of the Customs Act, 1969 (IV of 1969);
(C)
"Turnover tax certificate" means a sub-section (2) of section 10, or
a turnover tax certificate issued by the commissioner in favor of a person
listed under section 12;
(D)
"listed person" means a person listed under section 10;
(E)
"section" means section of law;
(F)
"interrelated persons" means two persons registered or listed under
the Act, of whom the shares of the same ownership amount to a minimum of 50
(fifty) per cent;
(G)
"representative" means any representative nominated by the taxpayer
in a proper manner for the purpose of performing any business under the law on
behalf of a registered or enlisted person;
(H) "form" means any form attached to these rules.
(I) "bonded warehouse" and "special bonded warehouse" means the bonded warehouse and special bonded warehouse as described in Chapter XI of the Customs Act, 1969 (IV of 1969)
Course Summary
(1) VAT is an indirect tax which the consumer pays to the government through a registered person.
(2) A tax levied on the actual addition of each value level of the supply by adjusting the material tax as opposed to the tax payable on the supply ই that level value added tax or VAT.
(3) VAT is levied on taxable imports and taxable supplies. VAT will be levied on all imports and supplies except for the exempted goods and services mentioned in the first schedule of the Act.
(4) VAT system is a material tax rebate based on automatic material against supply or sale.
(5) The seller collects VAT within the price received from the buyer and deposits the net VAT in the government treasury with the purchase level VAT rebate.
(6) As the value added tax is consumer tax, the consumer will pay the total value added tax applicable to the goods or services. As an intermediate process, all producers and suppliers will collect VAT on behalf of the government at each stage of sale and deposit it in the government treasury.
(6) Value Added Tax was introduced in Bangladesh on July 1, 1991. The new VAT law will be introduced from July 1, 2018.
(6) The standard rate of VAT is 15%. VAT rate of 15% is applicable on import and supply and VAT rate on exports is 0%.
(9) The standard rate of value added tax under the VAT system of 1991 is 15%. According to the budget of the last financial year (2015-16), there are 10 lower rates based on the reduced base price for some services other than the standard rate. Namely: 1.5%, 2%, 2.5%, 4%, 5%, 5.5%, 6%, 8.5%, 9% and 10%.
(10) Under the new VAT system, the registration limit is Rs. 60 lakhs and the enrollment limit is Rs. 30 lakhs.
(11) VAT obligation shall not arise in the business of goods or services mentioned in the first schedule of the Act.
(12) Characteristics of value added tax
(A) VAT is an indirect tax system.
Although the trader collects and deposits in the government treasury, it is
actually paid by the consumer.
(B) It is a consumer based tax system.
Whenever he spends, VAT will be levied on him.
(C) Single rate tax. 15% VAT is
included in the supply price.
Subject
to Difference Value Added Tax Act, 1991 Value Added Tax and Supplementary Duty
Act, 2012
Law
Structure The law is unorganized The law is organized into thematic chapters
The
law does not have different provisions
Many
aspects of current business cannot be covered by law. Attempts have been made
to cover almost all aspects of current business
There
are 3 schedules, there are 2 schedules
Schedules
HS Code based Schedules are nature-based delivery
Comment:
The new law has become easier to read and more understandable.
Subject
to Difference Value Added Tax Act, 1991 Value Added Tax and Supplementary Duty
Act, 2012
Field
of Imposition of Value Added Tax Import Stage Import
Production
stage supply
Service
stage, o
Business
stage.
Comment:
The scope of taxation has been widened, the complexity of the various stages of
tax definition and service has been removed.