**Executive Summary:**
The Delhi Value Added Tax Second Amendment Bill, 2015, amends the Delhi Value Added Tax Act, 2004. Key changes include revisions to tax rates for goods in the Fourth Schedule, adjustments to output tax and input tax regarding post-sale discounts, and modifications to penalty amounts for non-compliance. The Act will come into force on a date appointed by the Government via official Gazette notification, with potentially different dates for different provisions.
**Key Points / Main Content:**
**Amendment of Tax Rates (Section 4 & Fourth Schedule):**
* Revises VAT rates for goods in the Fourth Schedule, allowing the government to notify specific rates for listed goods.
* Specifies that these rates must be higher than the standard rate but no more than 30 paise in the rupee.
* Lists commodities subject to a twenty paise in the rupee tax rate, including petroleum products (excluding LPG, PNG, CNG, and Kerosene), liquor, narcotics (Bhaang), molasses, rectified spirit, lottery tickets, brake fluid, tobacco products, aerated drinks, and watches costing above ₹5000.
**Adjustments for Discounts and Incentives (Sections 8, 10 & 51):**
* Disallows adjustments in output tax for selling dealers and input tax for purchasing dealers for post-sale discounts and incentives via credit notes.
* Clarifies that credit notes for post-sale discounts or incentives are independent of the tax component, requiring no output tax adjustments.
* Specifies that no input tax credit reduction is needed by buying dealers for post-sale discounts or incentives where the selling dealer made no output tax adjustments.
**Registration and Penalties (Sections 22, 38 & 86):**
* Removes the requirement to file a certificate of registration when applying for registration cancellation.
* Extends the time limit for seeking security from dealers claiming refunds from 15 to 45 days.
* Reduces penalties for various non-compliance issues:
* Failure to comply with section 22(2) incurs a penalty of ₹200 per day of default, up to a maximum of ₹25,000.
* Reduces penalties from ₹500 to ₹200 in sections 86(5) and 86(9).
* Modifies section 86(16) regarding tax invoice issues.
* Omits the explanation in section 86(20).
**Other Amendments:**
* Section 89(4)(c) is omitted from the principal Act.
**Impact Analysis:**
**Dealers (Selling & Purchasing):**
* *Impact:* Changes in how post-sale discounts and incentives are handled for tax purposes, potential reduction in penalties for non-compliance, and streamlined registration cancellation process.
* *Action Required:* Understand the new regulations regarding credit notes and tax adjustments for discounts, ensure compliance with revised penalty structures, and follow the updated procedure for registration cancellation.
**Tax Department:**
* *Impact:* Simplified tax administration by disallowing adjustments for post-sale discounts, reduced monitoring efforts, and changes in penalty collections.
* *Action Required:* Implement the new guidelines for tax adjustments and penalties, update monitoring processes, and adjust enforcement strategies accordingly.
**Consumers:**
* *Impact:* Indirectly affected by changes in tax rates on specific goods.
* *Action Required:* No direct action required, but consumers may notice price adjustments on certain goods due to the revised VAT rates.
Key Entities Referenced
National Capital Territory of Delhi: A Union Territory and metropolitan region in India, encompassing Delhi and its surrounding urban areas. This policy document pertains to the government and legislative assembly of this territory.
Delhi Value Added Tax Act, 2004: The principal act being amended by this bill, concerning value added tax in Delhi.
Delhi Value Added Tax Second Amendment Bill, 2015: The specific bill being enacted to amend the Delhi Value Added Tax Act, 2004.
Delhi Legislative Assembly: The legislative body of the National Capital Territory of Delhi, responsible for enacting laws such as the Delhi Value Added Tax Second Amendment Bill, 2015.
Fourth Schedule: A schedule within the Delhi Value Added Tax Act, 2004, that specifies commodities and their corresponding tax rates. The amendment bill includes a substitution for this schedule.
Government of India Press, Ring Road, Mayapuri, New Delhi: The printing location.
P. R. Meena: Secretary who approved the publication of this document.
Liquid Petroleum Gas: A petroleum product listed in the amended Fourth Schedule under S.No. I.
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DELI-II LEGISLATIVE ASSEMBLY SECRETARIAT
NOTIFICATION
Delhi, the 29th June, 2015
BILL NO. 8 OF 2015
THE DELHI VALUE ADDED TAX (2nd AMENDMENT) BILL, 2015
A
BILL
to further amend the Delhi Value Added Tax Act, 2004 (3 of 2005).
No. 21(8)/V
T-2"/2015/LAS-VI/Leg./1834.—Be it enacted by the Legislative Assembly of the National
Capital Territory of Delhi in the Sixty-sixth year of the Republic of India as follows:-
1.(cid:9) Short title, extent and commencement.—(i) This Act may be called the Delhi Value Added Tax (Second
Amendment) Act, 2015.
(ii) It extends to the whole of the National Capital Territory of Delhi.
(iii) It shall come into force on such date as the Government may, by notification in the official Gazette, appoint:
Provided that different dates may be appointed for different provisions of this Act.
2.(cid:9) Amendment of section 4.—In the principal Act, in section 4, in sub-section (1), for clause (c), the following
clause shall be substituted, namely:-
"(c) in respect of goods specified in the Fourth Schedule, at the rates specified therein against the description of goods :
Provided that the rate of tax in respect of goods specified in the Fourth Schedule shall be higher than the rate of
tax applicable under clause (e) of this sub-section but shall not be more than thirty paise in the rupee;".
3.(cid:9) Amendment of section 8.—In the principal Act, in section 8,-
(i) in sub-section (1), for clause (c), the following clause shall be substituted, namely:-
" (c) the previously agreed consideration for that sale has been altered by agreement with the recipient for any reason
except where a discount or incentive is offered through a credit note after issuance of tax invoice in respect of a sale to a
registered dealer;"; and
(ii) in sub-section (2), after clause (b), the following explanation shall be inserted, namely:—
Credit notes issued on account of post sale discounts or incentives will be independent of tax component
"Explanation :
and no adjustments in the output tax would be required to be made.".
4.(cid:9) Amendment of Section 10.—In the principal Act, in section 10,-
(i) for sub-section (1), the following sub-section shall be substituted, namely:-
"(1) Subject to sub-sections (1) and (2) of section 8, where any purchaser has been issued with a credit note or debit note
in terms of section 51 of this Act or if he returns or rejects goods purchased, as a consequence of which the tax credit
claimed by him in any tax period in respect of which the purchase of goods relates, becomes short or excess, he shall
compensate such short or excess by adjusting the amount of the tax credit allowed to him in respect of the tax period in
• -which the credit note or debit note has been issued or goods are returned.
While issuance of a credit note of a post sale discount or incentive by a selling dealer, where no adjustment
Explanation:
to output tax; as per the provisions of sub-sections (1) and (2) of section 8 has been made, no adjustment for reduction of
input tax credit would be required by the respective buying registered dealer."; andPART IV] DELHI GAZETTE : EXTRAORDINARY(cid:9)
5
(ii) in sub-section (5), for the starting word "Where", the words and symbol "Subject to sub-sections (1) and (2) of
section 8 and conditions as may be prescribed, where" shall be substituted.
5.(cid:9) Amendment of section 22.—In the principal Act, in section 22, sub-section (7) shall be omitted.
6.(cid:9) Amendment of section 38.—In the principal Act, in section 38, in sub-section (5), for the words "fifteen days",
the words "forty five days" shall be substituted.
7.(cid:9) Amendment of section 51.—In the principal Act, in section 51, for the starting word "Where", the words and
symbol "Subject to sub-sections (1) and (2) of section 8, where" shall be substituted.
8.(cid:9) Amendment of section 86.—In the principal Act, in section 86 -
(i) in sub-section (5), for the words "five hundred", the words "two hundred" shall be substituted;
(ii) for sub-section (6),the following sub-section shall be substituted, namely:—
"(6) If a registered dealer fails to comply with the provisions of sub-section (2) of section 22 of this ,Act, he shall be
liable to pay, by way of penalty, a sum equal to two hundred rupees for every day of default subject to a maximum of
twenty five thousand rupees.";
(iii) in sub-section (9), for the words "five hundred", the words "two hundred" shall be substituted;
(iv) in sub-section (16), for clause (b), the following clauses shall be substituted, namely:—
"(b) having issued a tax invoice or retail invoice, has failed to account it correctly in his books of account; or
(c) failed to issue a tax invoice or retail invoice as required under the provisions of section 50 of this Act;" and
(v) in sub-section (20), the explanation shall be omitted.
9.(cid:9) Amendment of section 89.—In the principal Act, in section 89, in sub- section (4), clause (c) shall be omitted.
10. Amendment of the Fourth Schedule.-In the principal Act, for the Fourth Schedule appended thereto, the
following shall be substituted, namely:—
"The Fourth Schedule
(see section 4)
S.No. Commodity Rate of Tax
I . Petroleum Products other than liquid petroleum gas, piped natural gas, Twenty paise in the rupee
Compressed Natural Gas and Kerosene such as
(i) Naptha;
(ii) Aviation Turbine Fuel;
(iii) Spirit;
(iv) Gasoline;
(v) Furnace oil;
(vi) Wax (except petroleum wax used for manufacture of candles);
(vii) Mixture and combination of above products.
2 Liquor (Foreign and Indian Made Foreign Liquor). Twenty paise in the rupee
3 Country Liquor.
Twenty paise in the rupee
4 Narcotics (Bhaang).
Twenty paise in the rupee
5 Molasses.
Twenty paise in the rupee
6 Rectified Spirit.
Twenty paise in the rupee
7 Lottery Tickets.
Twenty paise in the rupee
8 Brake Fluid.
Twenty paise in the rupee
9 Tobacco and Gutkha, umnanufactured tobacco, bidis and tobacco used in Twenty paise in the rupee
manufacture of bidis and hooka tobacco
10 Aerated Drinks.
Twenty paise in the rupee
11 Watches costing above rupees five thousand. Twenty paise in the rupee
.2876(cid:9)
6(cid:9) DELHI GAZETTE : EXTRAORDINARY [PART IV
STATEMENT OF OBJECTS AND REASONS
Amendment in section 4 is aimed to make enabling provisions in the Act for levy of VAT in respect of goods
described in the Fourth Schedule at such rates as may be notified by the Government and specified against the
description of goods enlisted therein instead of a flat rate of 20%. However, this will be subject to the condition that such
rates shall be higher than the rate of tax applicable under clause (e) of section 4(1) in respect of goods not specified in
any of the Schedules but shall not be more than 30%.
Amendment in section 8 is proposed to disallow the adjustments in output tax of the selling dealer and the input
tax of the purchasing dealers on account of issuance of credit notes by the selling dealers for post sale discounts and
incentives as monitoring of such adjustments is not only a tedious job but also have no impact on the overall tax receipts
of the Department.
Amendment of section 22 is proposed to do away with filing of certificate of registration, while applying for
cancellation of his registration or the registration has been cancelled otherwise by the department. It will smoothen the
process of online filing of application. Consequential amendments are also proposed in section 86 and 89.
Amendment of section 38 is proposed to increase the time limit of 15 days to 45 days for seeking security from
the dealers claiming refund if security is required during processing of refund claims.
Amendment of section 86 is proposed to reduce the amount of penalties for delay in furnishing of information
relating to change in the nature of business nr closure of hncinesc, late filing of returnc, non-furnishing of information
and non-issuance of invokes. The expianaion appearing ailer sub-seciion (20) is also proposed io be uniiiied,i.o avoid
duplicity.
Amendments in the principal Act are being proposed for removing deficiencies / legal lacunae in the statute
thereby making the tax administration simpler and convenient for the dealers.
4.t.(cid:9) The-Bill seeks to achieve the aforesaid objectives.
FINANCIAL MEMORANDUM
The Delhi Value Added Tax (Second Amendment) Bill, 2015 does not involve any additional financial
implications since no outgo on new posts is anticipated from the Consolidated Fund of the National Capital Territory of
Delhi.
MEMORANDUM REGARDING DELEGATED LEGISLATION
The Delhi Value Added Tax (Second Amendment) Bill, 2015 does not make provision for the delegation of
power in favour of any functionaries to make subordinate legislation.
P. R. MEENA, Secy.
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