VAT Audit

Vat is the value added tax. VAT is a modern and progressive form of sales tax. It is a
multipoint tax with provision for granting setoff or credit of the tax paid on the
purchases against the tax payable on sales.
value added = sale price - purchase price.
The difference between our total VAT output and VAT input will be paid to the Government.

Why VAT Audit?

- To ensure high quality audit in an economic, efficient and effective manner;
- To Support the correctness of computation of tax and total turnovers;
- To ensure that the books of accounts and other records are maintained properly
- To facilitate the assessing authority to obtain proper and correct information about the dealer;
- To ensure whether the dealer has claimed the input tax set-off
- To determine the correct rate of tax charged by the dealer
- To verify the system of self-assessment and scrutiny of returns / statements filed by the dealer will be ensured

Applicability of VAT Audit

VAt Provisions require a dealer to get the books of accounts audited and submit a statement of accounts duly certified by
such auditor in Form VAT 240, within a perid of Nine months.

Registered dealers not being a company defined under the companies Act, 1956 or a company incorporated outside India,
having “Total Turnover” not exceeding Rupees One Hundred lakhs in a year.
Auditor should be : Chartered Accountant or Cost Accountant or a Tax Practitioner

Important Terms:

Turnover= The aggregate amount for which goods are  sold or distributed or delivered or otherwise disposed
of in any of the ways referred to in clause (29)(i.e., sale) by a dealer, either directly or through another,

Total turnover = The aggregate turnover in all goods of a dealer at all places of business in the state,
whether or not the whole or any portion of such turnover is liable to tax, including the turnover of purchase
 or sale in the course of interstate trade or in the course of export/import of the goods and the value of goods
transferred or dispatched outside the state otherwise than by way of sale.

The total turnover includes ED,VAT,CST,ST & freight & Insurance will be included if it is recovered from the customers.
But shall not include the stock turnover

The VAT form 240 is divided into 4 parts:

1) Certificate - Auditor has to certify the accuracy of books of accounts
2) General Information - Providing the particulars about the dealers & its business
3) Particulars of turnovers, deductions & payment of taxes
4) Particulars of declarations & certificates

The detailed checks of the various aspects of VAT in respect of the following areas
are enumerated in the annexes indicated against them.

• Registration of dealers (Annex I)
• Submission and scrutiny of returns (Annex II)
• Self/provisional assessment (Annex III)
• Business/Tax Audit assessment (Annex IV)
• Refunds, set off and compensation claims (Annex V)
• Input Tax Credit (ITC) (Annex VI)
• Payment and recovery of tax, penalty and interest (Annex VII)
• Miscellaneous (Annex VIII)

Penalty:

Failure to submit the copy of audited statements- Rs. 5,000 & Rs.50 per day for continuous default