In accordance with the Kerala Value Added Tax Act, the rules and regulations of Kerala VAT were implemented. However, all direct taxes have now been subsumed by the uniform indirect tax regime known as the Goods and Services Tax (GST).
Value added Tax in Kerala is in accordance with the norms stated in the Kerala Value Added Tax Act of 2003. While some states refused to opt into the VAT act up until only 2005, Kerala was among the initial states to adopt this tax. VAT was introduced to reduce the surging effect of taxes and boost trade by bringing in transparency in taxation. VAT is a multipoint tax and dealers can transfer the liability to the end consumer
Kerala Value Added Tax Rates
Products and goods taxed under VAT in Kerala fall under certain schedules and these can be broken into 4 main schedules. The 4 schedules are as follows.
Schedule I: The products that fall under this category include manually operated agricultural equipment, aids for physically handicapped persons, feed for animals, tobacco, coarse grains excluding rice and wheat, fresh fruits and certain vegetables. The VAT rate levied against these products is 0%.
Schedule II: The products that fall under this schedule are precious metals and stones such as gold, silver, Diamonds and pearls. Goods such as edible oils, flour (wheat, maize, corn and rice) also fall under this schedule. The goods in Schedule II attract a VAT rate of 1%
Schedule III: Goods and Products attract a VAT rate of 5% and the goods in this schedule include automated agricultural implements, utensils, and structures such as bridges, knives and baby products.
Goods that do not fall in the above schedules attract a higher vat of 13.5% and certain goods such as cigars, cigarettes aerated drinks and plastic bags attract an even higher VAT rate of 15%. The branded aerated drinks and plastic hand bags attract a 20% VAT and derivatives of tobacco such as PAN Masala and extracts and essences attract 22.5% VAT rate
Kerala VAT Registration
The Registeration of VAT is mandatory as per the rules set in the Kerala VAT Act of 2003. Certain people are required by law to register for VAT and these are any dealer of goods whose annual sales and turnover is equivalent to or greater than Rs 10 lakh. Dealers who import goods into the state of Kerala or export goods from the state are also required to register. Certain goods regardless of turnover or source of origin are required to be registered. For example, dealers of gold, silver and other precious metals are required to register for VAT. People acting on the behalf of the principle such as commission agents, brokers and auctioneers are required to register and finally any business person residing outside the state of Kerala but conducting business within is required to register for VAT
Kerala VAT E-Filing
Those dealers operating or based out of Kerala are required by law to file periodic VAT returns and also an annual VAT return. Filing of VAT returns can be done electronically and is applicable for those dealers who have had a payable VAT of more than Rs 10 Lakhs. For such dealers the filing must be done on or before the 15th of each month whereas those dealers who have a payable VAT of more than Rs 25,000 but less than Rs 10 Lakh are required to file their VAT returns on or before the 20th of each month. Those dealers who do not fall under either of these categories should have their VAT returns filed on or before the 25th of each month.
In addition to filing the returns on a monthly basis, dealers must also ile a Vat return on an annual basis and this needs to be filed by the 30th of April each year. The forms for filing of VAT can be found at http://comtax.kerala.gov.in/
Frequently Asked Questions
Can input tax credit be availed on those capital goods that are used to execute contract work?
Capital goods that are used to convert goods that will be incorporated in the execution of contract goods can avail Tax credit but no tax credit will be given to capital goods that are related to supply of labour for executing these contract works
Can one avail input tax credit for petroleum products and its purchase?
Petroleum products that fall in the fourth schedule is not applicable for input tax credit and other petroleum products are subject to the provisions laid out in the Kerala Value added tax act 2003