Value Added Tax1. VAT On Trade What is VAT? MD. LUTFOR RAHMAN Commissioner Date 19.06.10 VAT is a consumption tax or indirect tax First introduced in France in 1954 It is a tax on value addition in course of selling or transferring goods or services VAT = (Production Value – Input Value) x Tax rate VAT Administration Administered by NBR (VAT wing), Chairman, Member, 1st Secretary, 2nd Secretary - 7 VAT commissionerates (Commissioners office) - 32 divisional offices and more than 100 circle office Tools for VAT Administration: Value Added Tax Act,1991 Value Added Tax Rules, 1991, Audit manual SRO, Notification & Standing Order VAT was first devised By a German economist during the 18th century • Its main philosophy is not to effect the cost of manufacture or distributor & Collected on final consumption or final price; • Finally adopted by France in 1954 on large business (10th April) • In 1973 UK replaced sales tax with VAT; • It is a neutral & Multi – stage taxation system, collected at every stage • Tax on value addition & No cascading affect or Remove cumulative tax factor • Input tax credit mechanism & Invoicing is the main feature What is Value Addition? Value Addition = Wages (salaries, utilities, overhead expenses) + profit Or, (Output price - Input price) = value addition or, (Selling price - Purchase price) = value added How does VAT work A Import Input Price= 300 /VAT = 45/Value including VAT = 345/Import stage B Producing price = 600/VAT = 90/Net Tax (90-45) = 45/1st Producer C Producing price = 800/VAT =120/Net Tax (120-90) = 30/2nd Producer D Producing price = 1000/VAT= 150/Net Tax (150-120) =30/3rd Producer Revenue = 45/Revenue = 45/Revenue = 30/Total government revenue = (45+45+30+30) = 150/Copyright @ Lutfor Revenue = 30/- Page 1 Tax liability: On • • • Manufacturer, Trader & supplier Service rendered Importer & Exporter VAT Network • • • Trading & Imported goods Manufacturing & Supply of goods Rendering services Credit/Adjust VAT paid on inputs (Raw materials) is Creditable or Adjustable [except the final consumer] against output Tax & documentation can ensure forward shifting of VAT, but in case of Tariff Value credit mechanism does not work Input tax must be deducted within 60days of the goods in question being received in the business premises (Sec-9) Tax credit Credit on input tax against out put tax payable on goods manufactured, treaded, supplied or service rendered by him except; 1. Tax paid on exempted goods 2. Turn over tax paid on input 3. SD paid on input 4. VAT paid on package except for the 1st time 5. VAT paid on construction, balancing, modernization, replacement, expansion, renovation, repair etc 6. VAT in excess of the rate of VAT 7. VAT paid on travel, entertainment, staff welfare, & development activities 8. VAT paid on Tariff Value 9. Truncated base VAT in Bangladesh & World Introduced in July, 1991, Replacing Excise Duty at manufacturing stage - And Sales Tax at Import stage - Total VAT Reg. persons/Firms = 6.50 lac VAT implemented Countries = 61 77% Countries have VAT rate 15% & above Characteristics of VAT VAT has no cascading effect or no Tax on tax because of credit mechanism Self-Assessment/Self Clearance / Self policing system Built-in cross audit feature Easy to apply/ Universality Trade Friendly & Mostly Single rate VAT-able goods & Services Copyright @ Lutfor Page 2 3. Cultural. Wood. raw jute. Products. cotton etc All Services mentioned in 2nd schedule Life leading basic services. Transportation & Financial service Goods and services exempted by SRO No-199/10 of Table – 1. locally manufactured. Fruits. varnish Shaving materials All matches Mosquito coil PVC pipe All shoe & Sandals (>80tK) All bricks All ceramics & porsoline MS products Electric Fan Dry cell & storage battery Electric bulbs Rubber & Plastic foam Exemptions All goods mentioned in 1st schedule Primary Ag. silk. vegetables. pigments. Chanachur All fruit Juice & drinks Mineral water Energy drink All kinds of cigarettes Zarda & Gul Medicine Cosmetics Hair care item/product Soft drinks.* All goods (imported. Seed. religious & personal services Social welfare. 2. Life saving medicine & equipments. Life animals. 4 & 5 Cottage industries granted by concerned commissioner &Turnover Tax Tax rate Copyright @ Lutfor Page 3 . Energy drinks All soaps including liquid Coconut oil All fruits Jam & jelly Antiseptics & disinfectants Paints. computer. traded) except those mentioned in 1st Schedule of VAT Act * All services except those mentioned in 2ND Schedule of VAT Act Mandatory VAT (Turnover Tax or Cottage Industry is not allowed) Lozenge Biscuit. leather. salary. here registered Company will pay VAT not cottage industry All VAT & SD exempted Application.209/10 Who are to pay VAT? All importers irrespective of turnover & all business dealing goods & services. having an annual turnover of less than taka 60 lacks need to pay Turnover Tax @ 4% Registration for VAT Copyright @ Lutfor Page 4 . machinery& equipment not more than 25 lacks (any time in the year) Annual turn over not more than 40 lacks Value declaration by the VAT registered Company & approved Sub contract basis other branded goods can be made (FY. 4. 2..15% advelorum & 0% VAT Factor . enquiry & finally approved by commissioner of VAT SRO-168 / 03 Fixed TAX (SRO-209/10) Dhaka & Ctg city cor.3/23 or 15/115 or 15% on base value Rates of VAT Basically 15% for all imported.25%. Other area of the country .. here value addition 40000 & VAT rate 15%) For small retail business or shops Annually once or monthly installment To determine annual value addition calculate approximate profit of the business.. area ……… District city municipality area…. telephone. transportation cost etc.…… 4200 6000 tk 3600 4800 tk 2400 3600 tk 1200 1800 (a. electricity.09). area……… Other city cor.5%. SRO.5%. locally manufactured. rental. traded goods and services 0% for all exported goods Preferential rate of 4% for small-scale businesses (Turnover tax) • Cottage Industry (No duty & taxes at all) • Excise Duty (Bank deposit & Local air ticket only) Truncated bases (1.All businesses dealing in goods and services. having an annual turnover of taka 60 lacks or more Wholesaler & Retailer (96-97 FY) Value addition 20% & VAT rate 3% (FY-10) . 5% & 9%) • Fixed duty Cottage Industry Not a joint stock company Invested capital in plant. Trade License & Lease Agreement/Rental documents . 6. Registers kept centrally but commercial records in all branches List of all branches & duty as applicable elsewhere VAT-11 Challan issued centrally.At import stage importers pay VAT in BoE along with Customs Duty Businesses pay VAT as they collect in course of selling goods and services VAT collected at sources Commercial importer’s pay VAT as “Advanced Trade VAT” @ 3% at import stage. exporters. Goods.Musak.7 (Blue print. 8. 2. 4. 5. ERC (if necessary) . manufacturer/Supplier of goods & services renderer # Any taxpayer runs more than one business from different place must register separately for each # All businesses having a VAT threshold * [Failure to register despite legal obligation punishable offence] Registration Application in Form Musak-6 along with: . 3. 7.Annual turn over . Retailers mainly pay VAT 3% Electronic Cash Register (ECR) 1.Bank Account Number & IRC. Hotel Restaurant & fast food Sweet Shops Furniture sale Beauty parlour Community center Shopping mall Departmental store Page 5 Copyright @ Lutfor . Business & accounts controlled centrally Applicable for service rendering and trading stages except manufacturing stage.Photographs (2) & TIN certificate .Any importer or Exporter Voluntary Registration Any change then need to inform 14 days before How are to pay VAT? - VAT Registration is mandatory . Exemption from registration Exempted by general or special order . Input etc) For Production -Others (as per requirements) Central Registration Have to have permission from NBR Opportunity to pay VAT from central premises for all branches.# All Importers. tender bidder.15TK/10 sticks 18. Treasury . All kind of Gold & Silver seller & purifier (09) Order. Supplier pay VAT more than ATV Application to divisional officer ATV exemption ATV refund Sec-67 & rule-34kha Payment of VAT to Govt.40 – 9.Bill of Entry at the time of Importation .22. Autonomous. 04 Paid at import stage for commercial importers Assessed in Import BoE Value addition 15% for all & Rate of Advanced Trade VAT 3% Normally not creditable & refundable Goods in 1st schedule & service in 2nd schedule Govt.00 27 -32 52 & above Manual Cigarette or Biri Soft drinks Ceramic tiles. whole sale & retail shop (large & medium) 11.Account Current & Treasury Challan along with Returns VAT Payment code 1/1133/0000/0311 SD Payment code 1/1133/0000/0711 Turnover Payment code 1/1133/0000/0921 SD Rate on Production Name of the goods SL Segment 1 2 3 4 5 6 7 Low Medium High Premium Cigarette 8. basin & other products SD Rate 33% 53% 56% 58% 20% 15% 20% Copyright @ Lutfor Page 6 . 09. Semi-government.40 -19. Embassy. Diplomats. Educational & religious institution.9.17 /08 ATV (Advance Trade VAT) • • • • • • • • • • • Introduced -----. Bond licensed 100% export oriented industry Baggage rules & Temporary import etc & exempted by SROs If construction firm. General store 10. Diesel engine etc. Hear revenue 70 tk and seller gets 30 tk Value for VAT Import stage: Assessable Value (A V) = Cost (FOB price) + Freight + Insurance + Landing or handling Charge = Base value for duty Customs Duty (CD) = AV x % of duty SD = {(A V + C D) X % of SD} VAT = {(AV + CD + SD) X % of VAT} Duty paid value = (A V + All duty & taxes) Local Manufacturing stage Price of Raw materials (input) All import duties and taxes (except VAT and AIT if paid at import stage) All wages & expenditure related to its production/sale. MS product.8 9 10 Zarda & Gul Mineral water(up to 3L) All Cosmetics 20% 5% 20% Only Exception in VAT Cigarettes Calculated on retail price. Gas. Electricity. insurance etc. transport. All papers. VAT Act VAT calculation on Production stage Assessable Value (A V) = (All Input price + Commission+ Charge + Fee + All duties & taxes including SD + Profit) – VAT If paid before SD = A V X % of SD VAT = (AV + SD) X % of VAT Duty paid value = (A V + All duty & taxes) Wholesale Price = (Duty paid value + min10% Value addition) x 15% MRP = (Wholesale price + min 20% Value addition) x 15% Tariff Value Fixed base value for manufacturing products Total VAT = Tariff Value x 15% It is easy to apply Generalized & rationalized value for particular products Credit mechanism does not work Example Manual Cigarette & Biri. If retail price = 100 tk Hear SD rate = 55% & VAT rate = 15% Total tax = 70 tk. Telephone & Other services -Like WASA. Ship scraps. Tariff Value (09) Copyright @ Lutfor Page 7 . GI wire. Trade discount (Max 30 days in any 12 months & NMT 15% of actual value) Ref: Sec 5(2). Blade. Bricks.P & C. Cold rolled coil.I sheet. commission etc and profit Expenditure includes Packing materials. G. h) B s T c . 8 /k &6 /k 5 7 5 g 0 g O e n -2 /0 rd r o 0 8 0 5 6 m6 0 0 0 l .5 /1 0 m G O-0 ( 0 2 1) Ma u l C a tteo n a ig re r W filte ith r L c lly p d c d oa ro u e C c il Ro G set P he Cs e t I he P w e m fro liq idm o d r ilk m u ilk a Ppr ll a e B d m d o s in s s e s s la e a e f ta le s te l trip B d m d o c rb ns e s s la e a e f a o te l trip E c tra s rm r (5 le tric n fo e -7 k a) 5 v Ma h e &h n m d b c its(G C C o c in a d a e is u .120tk/ year .S L 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 Nm a e T riff V lu (G a a e O B ri n filte e o r . ru k N u Ma g b r Ma g ju e n o a.R k h w&T m o ic s a e p 44 Excise Duty on Bank deposit (Any time in the year) thousand ---------.Up to 10 Lac -------.1000tk/year . number Customers name & address. 17 (2 kha) & 18 (3) When to pay VAT Copyright @ Lutfor Page 8 . n o ic P e a p ju e G a aju e in p le ic . 11ka) & Make payments to government treasury & submit Returns Period: Normally within 15 days of the following month Invoicing All VAT registered units must issue invoices in prescribed form (Mushak-11. Invoice includes the following information: Suppliers name & address.Up to 20 Obligations of VAT Unit Declare value (for mfg only) & Maintain records of sale and purchase Issue Invoice (Mushak-11.2 /p 0 0 c . C GA to u .10000tk/year Domestic Air ticket -------300tk/Journey .Up to 01 Lac ---------.350tk /year .Up to 01 Core ---------. VAT Reg. or VAT & SD if applicable. .7 . Quantity & tax inclusive price The amount of VAT. Mushak-11ka) to the buyers.5 /1 0 m 6 0 00 l .Nil .7 /1 g .5000tk/year . invoice number.1 7 /2 p a k t 3 3 0 cp c e . .1 /p 30 -400 00 50 5 .Up to 05 Core ---------. Mode of transport Description of the supply to identify it. Paid It can be Manual or Computerized (permission from commissioner) Rule-16 (3 kha). Date of supply.More than 05 Core --------.1 /1 ) 7 0 10 g 0 /k V lu int k a e aa 3 5 9 5 cp c e . u v ic Coppright @ Lutfor .4 /2 p a k t 100 –280 60 7 3 /Mt 1 0 0 Mt 00/ 100 5 0 /Mt 150 5 0 /Mt 0 5 c . supply or export Original copy of account current (where applicable) (b) Any other documents demanded by the commissioner .35& R-24 Trade-friendliness of VAT Exemptions for primary agricultural products Pay as you collect from buyers/consumers Credit mechanism: opportunity to credit the VAT paid on inputs at the Import or earlier stage Preferential treatment for small businesses (turnover tax. cottage industry) Special Exemptions Rights of a VAT Unit Right to written notification in case of inspection by a VAT officer Right to getting a copy of inspection Report within a stipulated time Opportunity to self-defense in writing Opportunity of being heard Right to appeal to the Commissioner as regards the value determined by a Divisional Officer Copyright @ Lutfor Page 9 .In case of providing & export of service Original & duplicate copies of TR challan (where applicable) Any other documents demanded by the commissioner Ref: s.The VAT is payable against supply of goods or services rendered when the immediate event amongst the following occurs: When taxable goods imported (pay with import duty) When goods or service are delivered or supplied When the invoice issued When goods/service are delivered for personal use When the price/payment received partly or fully Mode of Payment For all taxable Goods & Services Treasury Challan with Return by adjusting the positive balance of account Current Record keeping Every manufacturer has to maintain the following Breaks of Accounts: Purchase register (Mushak-16) Sales register (Mushak-17) Account Current register (Mushak-18) Treasury Challan Invoice or Challan book (Mushal-11) & Return (Mushak-19) Tax compliance (Returns) Submit Monthly Return to the circle office (M-19) two copies within 10 working days of the following month (Insurance 20 WD) The return must be enclosed with In case of production. M-11d:Invoice(Service VAT). R-4(2b) 6. M-4:Return of Turn Over Tax. M-17a:Purchase & sales A/B for TT. M-11:Invoicing . M-14a:Machinery Import without VAT. M-16:Purchase Accounting book.TT/CI Enlistment certificate. Commissioner or his appointed officer (but not below A/C) TR.TT. M-11c:Invoice (Owners supply to manufacture) 20.R-22(1) 27. M-8:VATReg.34 kha Different form on VAT 1. R-9(5) 13. M-1b:Business/Commercial importers value declaration 4. M-1c:Co-efficient of exempted/exported goods R-(31a) 5. M-10: Application for Registration cancellation. R-3(9) 3. R-22(1) 28. R-12 15. M-1a:Input-output ratio/Co-efficient of TV. M-12a:Debit note.R-20(3) 25. Machinery etc. M-6: Application form for Reg. R-15 16. R-22(1) 30. M-15: Declaration for Stock of Raw material. M-19:VAT Return.31 form application (Verified by treasury officer) Approved by A/C or appointed officer Decision within 90 days Pre-audit clearance Account current adjustment is not refundable &Followed by Treasury Rules Sec. M-5:Detention memo. R-20 24. M-18:Account Current./Enlistment (VAT. M. R-7(3kha) 9. R-4(4 & 5) 7. R-16(1) 21. R-24(1) Copyright @ Lutfor Page 10 . R-16(1) 17. R. R-16(4) &17(3) 19. M-1:Input-output ratio & value declaration. R-4(16) 29. R. M-14:Undertaking of Imported machinery.17 22. M-17:Sales Accounting Book.R-21 26. R-17kha 23. Excise & VAT Appellate Tribunal when aggrieved by a decision of a Commissioner/Commissioner (Appeal) Refund • • • • • • • • Application within 6 months Provisional assessment for Customs Application to Divisional officer.67 / rule. M-6a: Application form for Renewal of registration 12. R-16 18.CI) 10.9: Application for Change of Premise/business. M-11b:Invoice verification(official). M-2b:Annual declaration of Turnover. M-12:Credit note.7(3) 8. R-11/4(2) 14. Plant. R-3(1) 2. M-11a:Sales cash memo.Right to appeal to the Commissioner/ Commissioner (Appeal) as regards any decision given by an officer below rank of a Commissioner Right to appeal to Customs. M-7: Declaration of premise. M-5a:Personal Undertaking for vehicle. M-21:Application for established exporter Reg.Manufacture Value of service .Service only Tariff value .sec 5 (1) – Import Base value of VAT .. M-29: Warrant for Bank Account freeze.sec 5 (2) . S-56&R-43 40. R-30(1) 34.Sec. M-22:Duty Drawback for exported goods. M-20:Exportable goods release application. such as. Identical Value: A manufacturer or importer can supply goods at an identical value all over the country provided the price is clearly printed on the goods or its container and certain conditions are fulfilled.goods stamped as “VAT paid at source”. etc.Total payment received Truncated value . M-23:Sample approval application for flat rate . R-23 37. 5 of VAT Act & Rule-3 Value declaration in M-1 Time limit for Approval of value declaration 15 working days from the date of receipt of the value declaration NO VALUE DECLARATION If declare Retail price (MRP) written clearly in indelible ink on the packet Submit MRP written packet with M-1D But base value not less than 2/3 of the MRP Page 11 s s s s Copyright @ Lutfor . R-41(1) 39.31.R-30(2) 35. profit. M-28:Governmwnt dues recovery notice. R-40 38. charge. M-24:Consignmentwise Drawback application. M-27:Destroyed/Damaged goods management. are shown in M-1 form are fulfilled. S-56(1) &R-43 2. factory price) Back Calculation value for both product and service Fix value for charity services and collect VAT Another two value systems Conversion Charge: A manufacturer can get his goods produced by another manufacturer in exchange of some conversion charge on sub-contract basis.Fixed by board Value on the basis of MRP (Cigarette. Valuation in VAT Different kinds of value Transaction value . Aerosol etc.R-27(2) 32. Medicine. M-26:Unused/unusable raw material management. M-25:Duty Drawback through Post Office. commission.R-28 33. Declaration of Value in VAT Legal Provision .R-30(6) 36. transport. Base Value Declaration value including input output co-efficient in form M-1 2. transport.principles Components: Value of all inputs.5% Insurance + Local Manufacturing stage Price of Raw materials (input) All import duties and taxes (except VAT if paid at import stage) All wages & expenditure related to its production/sale. Any change or amendment submit new declaration in the form M-1. insurance. Electricity. Gas &Telephone Other services like WASA. Registered person may supply goods on assessment & payment from the date on the basis of that declaration 3. 5 of VAT Act. insurance etc. Ref: Sec 5(2). or Copyright @ Lutfor Page 12 . etc. Gas.5 of the act. Components of value Sec. 7 days before the execution 4. Telephone & Other services -Like WASA. survey market value of identical or similar goods kept in the Circle or Division office or office of the Commissioner within 15 days that --• Base value is inconsistent with sec. Investigation. commission etc and profit Expenditure includes Packing materials. VAT Act Inputs Raw materials & Packing materials.Factor influencing value Market price Price of competitor Price of raw materials Brand name & image Value for VAT Import stage: Assessable Value (A V) = Cost (FOB price) + Freight + Landing or handling Charge Customs Duty (CD) = AV x % of duty SD = {(A V + C D) X % of SD} VAT = {(AV + CD + SD) X % of VAT} Duty paid value = (A V + All duty & taxes) ATV = Duty paid value X 1. Value of wages Profit & Wastage/depreciation Value declaration & approval 1. Electricity. or • Value addition as shown in form M-1 is significantly low. board.• Base value is less than the value of the similar goods or same nature or quantity of same or any other jurisdiction. person shall submit input output co-efficient in M-1A to the divisional officer & approve after scrutiny & correction. not have any objection to that value 6. Board may constitute value review committee on the request from Divisional officer or Commissioner 10. 11. No value declaration required Generalized & rationalized value for particular products Credit mechanism does not work Input output coefficient to be declared in M. In case of TV Reg. Price lists of the goods shall be affixed in such a place so that it can easily be sighted. or • Value is significantly low because of any relationship between supplier & purchaser • Opportunity of being heard & determine the appropriate base value by the Divisional officer & will be effective from the date of such declaration 5. Change or amendment needs to be heard 12. Commissioner VAT may. Process within 15 working days or shall be deemed. person can apply within 30 days & Commissioner should give decision within 15 days 9. Trade discount (Max 30 days in any 12 months & NMT 15% of actual value) & publish in a national daily & inform divisional officer also 7.1a 3. VAT in service VAT-able Services: All services except 2nd Schedule Exemptions (16 Services) Copyright @ Lutfor Page 13 . Aggrieved Reg. suo moto or on application or market price can fix base value 8. by general or special order direct to declare value for assessing tax and determine the procedure Tariff Value Fixed base value for manufacturing products Total VAT = Tariff Value × 15% Easy to apply. For service. 00 S008.00 S016.00 S075.20 Restaurants Copyright @ Lutfor 15 16 S012. & student education promotional goods All kind of binding charge Internet provider (only for educational Ins.00 S006.00 S057.2 0 S004.00 S077.00 S073.00 S055.00 S063.20 C & Forwarding Agent Page 14 .00 S007.10 Hotel 1 0 S001.00 S044.00 S048.4) SRO 199/10 S064.S001.00 Mandatory VAT Services 0 S001.14 S027.00 Hotel & restaurant Temporary hotel & restaurant with not more than two electric bulb & no electric fan Construction Cold-storage Advertisement Printing Binding Internet Insurance Procurement Construction services provided before June 1991 Cold-storage Advertisement firm regarding Classified ads in newspaper Printing press: Charges for printing books.09 Insurance company for sea going vehicle and private sector power generation company premium Procurement provider (only school Tiffin provider) Cultural program Ticket less than 100 taka of cultural program where foreign artists perform Doctor Transportation Specialized doctor (09) Transportation contractor (only agricultural food carrier) Land seller Electricity Electricity for irrigation Tailoring &Tailors Tailoring shops &Tailors other than those having A/C & the large Tailoring shops located in Dhaka & Ctg.00 S038.00 S037.1 0 s001. Metropolitan area Tourist spot Tourist spot (including Historical place) Travel agency Manpower exporter All broker including stock broker Tour operator (table . periodicals.20 SIM card supplier S015.02 S012.) .01 S008. 30 Pathological lab S030.00 WASA S026.00 Audit & Accounting Firm44 S035.00 Taxable goods repairing 41 & servicing center (09) S032.00 Film Studio S020. 28 telex.00 Construction Firm S005.20 Port S007.00 Consultancy & Supervisory S033.2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 1 0 1 1 1 2 1 3 1 4 2 9 3 0 3 1 3 2 3 S002.10 Medical center S029.10 Telephone.00 Furniture shop S025.00 Decorators and caterers 17 S003.00 Advertising Firm S008. tele-printer.00 Survey Firm S023.00 Insurance company S028.10 Printing Press S009.00 Transportation contractor S049.00 Rent-a -car Page 15 S034.00 Courier service & EMS S029.20 Film Distributor S024.00 Beauty parlor S012.10 Land developer S010.00 Sports organizer S048.10 Warehouse S005.20 Dockyard S004.00 Auctioneer S010.00 Izaradar 42 43 S040.00 Shipping agent Copyright @ Lutfor 45 .0 Health club & fitness center S047.20 Building construction 18 19 20 21 22 23 24 25 26 27 S018.10 Cinema hall S023. fax & internet firm S031.00 Security Service S046. workshops S003.10 Motor Garage.00 Jewelry (all kinds ) S027. 00 Aircraft & helicopter chartered or rental Ins Indenting firm Community centre Program HR management & supply Place & building rental S038.00 Credit card issuing firm S062.00 Procurement Provider 46 47 48 49 S050.00 Money Changer S063.3 3 4 3 5 3 6 3 7 3 8 3 9 4 0 5 3 5 4 5 5 5 6 5 7 5 8 5 9 6 0 6 1 S036.00 AC tailoring shop (Dhaka & ctg big only) S064. Interior designer/decorator S051.00 Maintenance Firm (floor.00 Cultural program with foreign artists 50 S039.00 Lottery Ticket Vendor 52 Copyright @ Lutfor Page 16 .00 Glass sheet coating institutions S060. surface cleaning) S066.00 Buyer of Auctioned goods S061.20 Satellite Channel distributor S059. S036.10 Amusement.30 AC Railway service S037. theme park S064.00 Engineering firm S053.20 AC launch service.10 AC Bus service S036. theme park S065.00 Electricity Supplier S058.00 Attendee in Board Meeting S054.00 Banking & NonBanking service provider S057.10 Satellite Cable Operator 51 S039.20 Amusement.10 Architect.00 Advertisement provider via satellite channel S056. 20 Binding charge 15 16 17 18 19 20 21 22 S045. S073.20 Graphic designer S052.00 Private medical.00 Photo Studio/Color / Black 23 10 S021. Truncated base for services at different rates Ref: SRO 173-ain/2004/419-VAT.00 Sound/lighting equipment S055.00 Community center 09 S019.00 Sweet Manufacturer/Seller 25 12 S029.00 Coaching center S069. Truncated base It is only for services. date: 10/06/2004 Truncated base of VAT Services Copyright @ Lutfor Page 17 .00 Cold storage 02 S08.00 Human resource supplier & management Ins.00 Manpower exporter Stock & security broker Social & sports club Tour operator Own branded garments Others 03 S011.0 Legal Adviser S050.00 Audio. Government can fix value for charity services & back calculated value ban be imposed.10 Freight Forwarders 07 S016.00 Indenting firm 06 S015.00 Auto laundry 05 S014.00 Plant & machinery rental 24 11 S022. Engineering & College S071.00 Specialized doctor VAT Registration: Threshold Annual Turnover 40 lacks or more Annual turnover less than taka 40 lacks go for Turnover Tax (TT) Determination of value for services : Section 5(4) – total receipt against the services provided.00 Auto wood cutter/seasoning 14 S044.00 English medium school S070.00 Land sale S067.00 Travel Agency 08 S017.Other identified services 01 S06. video.00 Immigration advisers S068.00 Program organizer S072.20 Dental clinic 13 S042. CD shop/rental 04 S013. S L Name Rate Copyright @ Lutfor Page 18 . 5% 1.00 S029.25% 4.00 S009.25% 2.10 S014.00 S005.20 S029.10 S007.00 12 S018.10/2 A/C Bus & Lunch service 0 S037.00 S024.5% 5% 4.5% value ) Auctioneer Land Development & building construction Indenting firm Freight Forwarders Travel agent Cinema autographic studio Photo composer Surveyor Film Distributor Furniture manufacturing stage & Sale center (provided 4.00 Procurement Provider Copyright @ Lutfor .25% Page 19 17 18 19 20 21 22 23 24 25 S026.00 S034.00 S036.5% 4.00 S023.30 S032.10 S029.005% 3% 2.10 S004.00 S016.5% 15% 9% & 15% Printing press (Only Service or S + Input 4.00 S015.5% (09) 15% 15% 15% 15% 4.5% 2.25% 2.00 Restaurant (AC & other) Motor garage.5% 5. Workshop & Dockyard Construction Firm Warehouse & Port Advertisement (private & public not classified add) 15% & 6% 4.5% paid at M stage ) Gold & silversmith Jewelry (service) Courier & EMS (on Service) Medical Center Dentist Pathological Laboratory Consultancy & supervisory Firm Audit & Accounting Firm 15% 1.00 S028.5% 15% 15% 6% 4.20 02 03 04 05 06 07 08 09 10 11 S003.00 S020.5% 3% 1.5% 4.00 S008.00 13 14 15 16 S019.00 S010.01 S001. 20 S065. Oil) 2.5% 4. Engineering & College Programme organizer Human resource supplier & management Ins.25% & 4.00 S049.5% 4.00 S069.00 S050.26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 S040.5% Transport rental 4. Lottery ticket Sellers Immigration advisers Coaching center English medium school Private medical.25% 15% 4.5% Architect.00 S078.) Amusement & Theme Park Picnic & shooting Spots House Cleaning maintaining Org.00 S072.5% 2.00 S061.0025% 15% 1.5% 15% 15% 4.00 S057.5% 4.00 S062.00 Security Service Legal advisers 4.10 S064.00 S060.5% Carrying/Transport contractors (Pet.005% Invoicing Copyright @ Lutfor Page 20 . Won branded garments seller 15% 5.5% 4.00 S056.00 S070.00 S064. charge) Electricity Distributor Glass sheet coaters Buyer of auction goods Credit Card provider Money Changer A/C Tailoring Soap (Dh & Ctg. Interior decorator & designer 4.00 S045.5% Banking &non Banking (fee.5% 4.5% 4.00 S067.00 S066.00 S071.00 S048.5% 4.5% 4.00 S068.00 S063.00 S059.5% 5. Advertisement Agency 5.25%.25% 2.5% 3% 2. e) Educational institute. 4.09.Audit & Accounting Firm 10. • • • If manufacturer supplies goods as Procurement Provider through Tender participation then need not deduct at source *** Deposit in TR.5% 5% 4. c) Bank.5% 4.Construction Firm 4. 02 • Section 6 (4kaka) & General Order No: 05/09 VAT from services at SOURCE (26) 1. Insurance or other financial ins.Mushak.Survey Firm 7. Semi-government.Printing press 6.Isaradar 9.5% Page 21 . b) NGOs. Autonomous institution.5% 15% 4.5% 4. Buyer of auctioned goods Copyright @ Lutfor 4.5% 15% 1.Motor garage. Attendee in a Board-Meeting 14. Rent-a-Car 13.Consultancy & Supervisory Firm 8.Dockyard 3.11 & Tax inclusive price VAT from services at SOURCE 22 services for deduction at source Source points: in most cases service receivers a) Government.5% 9% & 15% 4.6(3) dt: 28. Workshop 2. Procurement Provider 11.5% 15% 4.7 form or Book transfer within seven working days Record preservation six years & monthly report (M-18a) to NBR central Data processing unit within 15 of the next month A/C No: 1/1133/0000/0311. Transportation Contractor 12. *** File NO. d) Limited Co. Vendors/Sellers of Lottery Tickets 20.11. 16 &17. Architect. Security service 21.to be imposed by the Commissioner in case of failure Books of accounts Mushak . 15% Hotel -normally on sale ………………. Account current book (Mushak-18) is not usually required for service renderer with the exception of cinema halls VAT on Bank.25% 15% 4. Aircraft or helicopter chartered or rental Ins 15% 4.5% 15% 2. Legal advisor 25. Insurance.15% Copyright @ Lutfor Page 22 …… 15% .5% 15% Responsibility to deduct VAT at source Deduction and deposit of VAT payable on certain services is mandatory: Sec 6(4kha) & 6(4ga) Certificate of deduction to be given to the service renderer Interest @2% to be paid in case of non-deduction or non-deposit Deducting authority will be dealt with as if the authority is a service renderer Penalty not exceeding Tk 25. charge (Except export & stock exchange payment) Insurance -on all premium……………………………………. Courier & EMS 17. fee. Auctioneer 16. Maintenance Firm 19. Decorators and caterers 24.000/. Repairing and servicing centre 23. Interior decorator & Graphic designer 26.5% (08) 15% (08) 15% (08) 15% (09) 4. Hotel & Restaurant Banking & Non Banking Service provider -all commission. Travel Agent 18.15. Engineering firm 22.………………….5% 4. 5% -Show room sale (provided 4.19 Tax periodOne calendar month.. Furniture Advertisement Firm -Government.5% Furniture -Manufacturing stage ………………………………………..5% SD Rate on Services SL 5 6 7 8 • • • • • • • • Name of the Service Hotel & Restaurant (Alcohol or floor show) All kinds of SIM card supplier Cinema hall Satellite channel distributor SD Rate 10% 35% 35% 25% Central Registration Permission from NBR Opportunity to pay VAT from central premises from all branches. Registers kept centrally but commercial records in all branches List of all branches Duty as applicable elsewhere VAT-11 Challan issued centrally.… 6% & 15% Advertisement Firm.. 4.Restaurant -normally on sale ………………. Government Bank & Insurance ………………………………………………… 15% -Private. Private Bank & Insurance ………………. Semi-Government. Construction Firm. Building Developer. NGO. stage) …. Business & accounts controlled centrally Applicable for service rendering and trading stages except manufacturing stage.5% Building Developer -on sale or handed over value …………………………… 1. 9% (Other than classified advertisement) -other ……………………………………………………… 15% Construction Firm . Return Submission Mushak. Three months (TT) & Six months Copyright @ Lutfor Page 23 .On quoted value ………………………………………… 4. 1.5% paid at Mfg. tax evasion and other delinquencies. or h. or demonstrates it to be false. Fails to give a tax-invoice or gives untrue invoice. Makes consciously a false statement or declaration. or i. Evades or attempts to evade tax by submitting forged or false documents to a VAT officer. Gives an invoice in which an amount of VAT is specified. non-compliance. Takes input credit through forged or fake invoice. Fail to present documents if asked twice by the officer or d. or g.Non preservation or destroys or alters document or mutilates any part of document. 2) Fails to submit a return within the specified date 3) Fails to inform any changes about registration or 4) Fails to comply with the direction of summons (S-25) 5) Violates any other provision of this Act. Fails to pay revenue through directed twice. or c. -Ref: Sec 37. VAT Act Copyright @ Lutfor Page 24 . though he is not a registered person. Attempts to evade VAT by supplying goods without M-17 & payable VAT in M-18. aa. or f. Obstructs or prevents from entering VAT officer. Engages himself in believe that VAT or.Adjudication What is Adjudication? Adjudication in VAT and customs administration is a quasi-judicial process through which a competent VAT officer is empowered to adjudicate cases involving irregularities. or j. Major a.4. or (jjj) Removing goods or rendering service without positive balance of A/C (k) Does or abates in doing anything specified in clauses (a) to (jjj). cc. Submits untrue material information return. or fails to submit return after lapse of time specified b. or doest preserve it as per requirement e. Evades or attempts to evade VAT or SD. or bb. Quasi-judicial: Having characteristics of a judicial act but performed by an administrative agency or official Offences for adjudication Minor 1) For not getting registered despite obligation. other duties payable on such goods has been evaded. 000/not exceeding Tk 500. Dispute settlement Administrative process • Commissioner VAT (particularly for value approved by divisional officer) Copyright @ Lutfor Page 25 . Commissioner Commissioner Commissioner (Appeal) Adjudication of duty evasion & confiscation cases : Rank Commissioner => Add.000/- Power of Adjudication Adjudication of irregularity cases: Divisional Office In case of adjudication involving penalty only Divisional Officer--. Commissioner => Superintendent => Value of the goods exceeding Tk 1500.000/not exceeding Tk1500.000/not exceeding Tk 100.000/not exceeding Tk 1000.full authority “value of goods” does not include the value of conveyance Adjudication process Case in writing Issuing of show-cause notice (SCN) in writing Personal hearing [Sec 37(5)] Issue adjudication order Opportunity of summary adjudication. Commissioner => Joint Commissioner => Deputy Commissioner=> Asstt.000/not exceeding Tk 300.Penalties • Minor Fine not < 5 thousand & not > 25 thousand taka • Major Fine not < Equal to & not > Two & a half times of the evaded duties Irregularities other than evasion Fine not < 10 thousand & not > 1 lack taka Competent VAT officer Superintendent Assistant Commissioner Deputy Commissioner Joint Commissioner Addl. Record Keeping Record Keeping and Accounting in VAT Importance of record keeping in VAT Account or Record based tax system Audit based Payment & Credit not acceptable without record or documents Tax Liability determination Legality Characteristics of VAT as a tax system VAT is livable at every stage of value addition Self assessment system Accounting & Audit based Credit mechanism functions Business friendly & helps industrialization Keeping records Legal Requirement.• • Valuation Review Committee (Constituted by NBR) National Board of Revenue Judicial Process Commissioner Appeal within (3+2 months) Appellate Tribunal (3 months) High Court / supreme Court & Tax Ombudsman Appeal Authority Appeal to Deposit UP to Add. Appeal Tribunal the fine (09) Tribunal High Court no Time period for application 3 (three) Months Only Com. if not 10% of Com. sec-31.22 When and how long? . Appeal can permit another 2 (two) more months Appeal decision should be given within 9(nine) months otherwise the appeal shall be deemed to have been granted by the appellate authority Sec – 42 5.From the time of job 4 (four) years Sec-33 In case of undecided cases till the final disposal Record keeping (mainly) Copyright @ Lutfor Page 26 . Appeal 10% of the demanded Commissioner Tribunal Duty. rule . Com. Com. Every manufacturer has to maintain the following Breaks of Accounts: • Purchase register (Mushak-16) • Sales register (Mushak-17) • Account Current register (Mushak-18) • Treasury Challan • Invoice or Challan book (Mushak-11) • Return (Mushak-19 Record Keeping Nature of Business Register a) Producer 1) Purchase 2) Sale 3) Account Current 4) Musuk-11 5) Input 6) Production 1)Purchase of goods & Services 2) Supply of goods & Services 3) Treasury challen 4) Return copy 5) BoE copy 6) Credit & debit note 7) Export Shipping Bill Records/Documents b) Service 1) Purchase 2) Sale 3) Musuk-11 4) Input 5) Production 1)Purchase of goods & Services 2) Supply of goods & Services 3) Treasury challen 4) Return copy 5) Import & Export BoE copy 6) Credit & debit note 7) Export Shipping Bill c) Commercial Importer 1) Purchase 2) Sale 3) Account Current 4) Musuk-11 D) Turnover 1)Purchase & Sale 1) Return (Musuk .& cash Page 27 1)Purchase of goods & Services 2)Goods Seal 3) Treasury challen 4) Return copy 5) Import & Export BoE copy Copyright @ Lutfor .11) 2)Annual declaration 3) Registration no. credit voucher. Tax periods 3 months for Goods & services 1. cash memo. payable & creditable VAT & where applicable.Mushak-19 .When and how? Period: Normally within 15 of the following month Insurance – 20 days Submit Monthly Return to the circle office (M-19) within 15 10 working days of the following month.memo Commercial documents Books of Account or files or any documentation Example. daily sale. purchase accounts. bank account. Ledger. cash book. Financial statement & Analysis. Profit & Loss account.debit. Who maintains this account and how? VAT Registered person A/c system is a method of paying VAT payable on a supply in advance to the govt. Bank account reconciliation & balance sheet & all related documents including Audit reports VAT Accounting and Payment Procedures: Procurement of inputs Entry (+) in the Purchase Register Entry (+) in the A/C Current Register for input credits Using inputs Entry (-) in the Purchase Register Manufacturing outputs Entry (+) in the Sales Register Supplying goods/ Rendering Services Entry (-) into the Sales Register Issue Invoice From the VAT Challan Book Payment/ Adjustment of duty Entry (-) in the A/C Current Register for output tax Delivery of Goods/ Services Books of records Account Current register – M (18) What is account current? An account maintained with the commissioner by a registered person in a specified form in which detailed of purchase. sales treasure deposits. treasury. Primary & journal book. Books of records VAT Return. other taxes shall be entered. Bricks Copyright @ Lutfor Page 28 . profit & loss appropriation account.Submission of return . Indenting firm 3.4:1 checking) Unit profile Skilled Officer Change of attitude Voice or Massage An Overview of VAT Copyright @ Lutfor Page 29 . 2. Shipping agent 4. 100% exported oriented garments industries & deemed exporter 6 months for Exporter & Services Construction firm Clearing & forwarding firm Consultancy & Supervisory firm Procurement provider Disputes Valuation regarding losses Valuation in case of devaluation of money Registration Criteria Cancellation/Amendment/Change of registration Research Pressure group What is needed Check/Examination of return Compare between return & value declaration Statistic (revenue) should be based on return Risk management (Ex.