There are broadly two types of incentive schemes. The first category is an exemption scheme where a dealer is exempt from the payment of tax on sales as well as on purchases of raw materials purchased against prescribed form, for a fixed period or/and up to a monetary limit. The second category is a deferment where a dealer is allowed to postpone the payment of tax on sales and purchase tax payable on raw materials purchased against prescribed form, for a fixed period or/and up to a monetary limit.

Yes. Sales by the eligible unit would be exempt from tax. However, VAT would be payable on the value added by subsequent sellers.

No. Instead, an amount equal to the allowable set-off would be refunded. Form N-15EC and Form BC are abolished.

The amount of refund due should be declared on your VAT return and followed by a refund application.

You have to complete a VAT return Form 209 and file it quarterly (See leaflet MVAT107) Where you have been charged VAT on the purchase of raw materials you can claim a refund of the amount equal to the set-off admissible on the VAT return. Where you have been charged VAT on other business purchases you can claim this as a set-off, which can be adjusted against the VAT payable, if any.

Yes. Tax invoice to contain certificate in the prescribed form and amount of tax should be shown as ‘nil’.

Since you have not been charged VAT, there is no VAT for you to claim set-off on. You should charge your customer VAT on your profit margin (value addition) and issue a tax invoice showing VAT on this amount only.

Amount to be deducted from the exemption incentive is as follows: Particulars - Amount to deducted from the monetary limit of incentives Turnover of sales under the MVAT Act of the goods specified in the Eligibility Certificate - A sum equal to the amount of VAT, which would have been payable Turnover of inter-state sales of the goods specified in the Eligibility Certificate - A sum equal to 4% of the turnover of sales, If the goods are generally liable to CST at a rate lower than 4%, a sum equal to such lower rate, A sum equal to 1% in the case of a Mega Project Note : Inter-State sales not supported by Form C are not eligible for exemption

You should collect VAT on sales of goods. Payment of VAT collected is to be deferred for the agreed number of years or up to a monetary amount.

Yes. You issue tax invoices for the full amount of tax due, collect it from your customers, and defer the payment of tax so collected until the prescribed limit.

You pay the VAT charged to you and claim set-off under the normal provisions.

The amount of VAT payable on sale of the goods specified in the Eligibility Certificate is to be deducted from the eligibility amount.

This is a financial transaction and there are no implications for VAT.

Contact your local Sales Tax Office.