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  • Odisha VAT

    Overview of VAT in Odisha:

    Value Added Tax or VAT is a tax levied on the sale and purchase of commodities in a state. In Odisha, the VAT Act was implemented in 2004. Sometimes referred to as the Odisha Value Added Sales Tax Act, the tax guidelines are based on the Central Government’s Empowered Committee. Introduced to consolidate and provide for the law, the VAT Act is applicable to the entire state. Value added tax in Odisha is levied on the purchase or sales of commodities.

    Odisha VAT Forms:

    The Odisha Value Added Tax Act of 2004 has around 93 different forms that are required to register for VAT in Odisha. Each form adheres to a certain requirement, as laid down by the state’s Tax Department.

    A few of the important forms are listed as under:

    • Form VAT 101 - Application for registration
    • Form VAT 001 - Certificate of registration under Section 31
    • Form VAT 101 C - Declaration for importing taxable goods
    • Form VAT 317 - Tax invoice
    • Form VAT 201 - VAT returns

    Odisha VAT Rates:

    The VAT charged on goods in Odisha differs according to the product. The rates are divided into categories based on the four schedules of the Odisha VAT Act 2004. The provisions are categorized under Schedule A, Schedule B, Schedule C, and Schedule D.

    Schedule A:

    Under this schedule more than 47 goods and products are exempted from VAT that is they attract 0% VAT rate. These products include agricultural implements, electrical energy, coarse grains, books, textile fabric, petrol, sugar etc

    Schedule B:

    Under this schedule a VAT rate of 1% applies to gold and silver, bullion, precious stones and platinum, among many others.

    Schedule B(1):

    Under this schedule a VAT rate of 5% applies to more than 131 goods and products, which include communication equipment, intangible goods like patents, copyrights, and REP licence, medicines and drugs, printed materials, ores and minerals, earth moving machinery etc, garments, etc.

    Schedule B(2):

    Under Schedule B(2) different commodities are charged different rates.

    • Unmanufactured tobacco, beedis, and tobacco used for manufacturing beedis is charged 10% VAT.
    • Tobacco and its products, other than unmanufactured tobacco and beedis, have a VAT rate of 25%.
    • A rate of 50% is applicable on all pharmaceutical oral liquid preparations, other than Homeopathic and Ayurvedic drugs, containing absolute alcohol 20% v/v or more in the finished product.
    • Pre-owned commercial vehicle sold through registered dealers have 2% VAT rate levied on them.

    Schedule B(3):

    Under this schedule a VAT rate of 13.5% applies all other goods not covered by Schedules B, B(1), B(2), and C.

    Schedule C:

    Under this schedule a VAT rate of 20% applies foreign and country liquor, light diesel oil, motor spirit including petrol and high speed diesel, and narcotics.

    Schedule D:

    The following goods fall under this schedule a VAT rate. The rate may vary according to the commodity:

    • Capital goods purchased or paid prior to 01.04.2005
    • Capital expenditure incurred prior to the date of registration under VAT.
    • Capital goods not connected with the business of the dealer.
    • Capital goods used in manufacture of goods or providing services or trading activities which are not liable to tax under VAT.
    • Capital goods used in energy/power including captive power.
    • Capital or other expenditure on land, civil structure or construction.
    • Second hand purchase or subsequent purchases of capital goods.
    • Vehicles for conveyance and transportation.

    Odisha VAT Registration:

    In Odisha, VAT Registration is mandatory for dealers who have an annual turnover above Rs.5 lakhs during the current year or during the preceding twelve months. Dealers who are involved in the sale and purchase of goods from other states should also register for VAT. Additionally, VAT registration is also mandatory for those involved in manufacturing of goods with a turnover of Rs.1 lakh or more per year.

    In case a dealer doesn’t qualify under for mandatory Odisha VAT Registration he may still obtain Odisha VAT Registration voluntarily under Section 26 of the Odisha VAT Act 2004. Dealers who wish to establish a business in the state can also obtain VAT registration voluntarily under Section 26.

    To obtain Odisha VAT Registration, the dealer must submit the following:

    • Application for VAT Registration in Form VAT 101
    • Proof of identity
    • Proof of address
    • List of items to be manufactured or traded
    • PAN copy
    • Bank statement
    • Photo of the promoters and other details to the concerned authorities.

    Odisha VAT Return e-Filing and Payment:

    All dealers in Odisha are required to file an annual VAT Return within six months from the end of the financial year. Dealers whose annual turnover is over Rs.40 lakhs must submit an annual VAT audit certificate along with the annual VAT Return.

    In addition to the annual VAT Return, dealers are also required to file monthly or quarterly VAT Return depending on their respective tax period within a period of 21 days at end of tax month or tax quarter, whichever is applicable. VAT Returns can be e filed through the government website.

    FAQs on Odisha VAT:

    1. What is the penalty for failure to register VAT in Odisha?

      Yes. The dealer will have to pay Rs 5000 to Rs 10,000 for each month of default, in case he hasn’t registered within two months, from the date when he is required to start paying tax.

    2. What happens in case of failure to pay VAT? A dealer fails to pay VAT in Odisha?

      Any registered dealer in Odisha, who commits a tax default will have his registration certificate suspended till the VAT is paid.

    3. What is the penalty for failure to file a tax return?

      In case a dealer misses to file the tax return, a penalty of Rs 500 and an interest of 15% per annum, according to the government’s regulations, will be charged.

    4. Is there a need for security at the time of VAT registration?

      Yes. If you are a dealer and are registering for VAT in Odisha, you will have to furnish some documents, as per the Commissioner’s directive, as security to ensure there is no tax evasion.

    5. When should tax returns be filed?

      A registered dealer In Odisha is required to file a quarterly return to the appropriate assessing committee within 30 days after the end of every quarter.

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