Monday, April 15, 2013

Lump sum Payment - Explained

Similar to what we have compostion scheme in VAT or Service tax, we have "Lump Sum Payment Scheme"

Also see : Bare provisions of the LBT Rule 27

Before reading the explanation below, let me clarify the recent notification. As per the Rule 27, this scheme is applicable only for those dealers who's total purchases during the year is less than 5,00,000 but there is a new notification/ circular by TMC to increase it to 10,00,000. I have not yet received the copy of the circular, but have heard it from reputable sources the contents of Circular. I am explaining this Scheme with reference to new circular.

As per new circular new LBT slabs are as below

Slab NoTurnover of all purchasesLBT Payable
1Up to Rs. 1,00,000/-Nil
21,00,001 to 2,00,0004,000/-
32,00,001 to 5,00,00010,000/-
45,00,001 to 10,00,00020,000/-

Now let us understand what is the "Lump Sum Payment Scheme"

If a dealer satisfies the below conditions then he can pay LBT on "Lump Sum Payment"
1. Purchases during the year less than 10,00,000 Rs.
2. Furnish Declaration in Form R.
3. Receive order granting permission.
4. Make payment within 15 days from date of receipt of order.

As per second proviso to Rule 27(1) id the dealer does not make payment within 15days (i.e. the time stipulated) then permission shall stand withdrawn.

But as per third proviso to Rule 27(2) if the dealer makes payment within
> 3 months from date of receipt of Order              OR
> End of the year in which permission was granted
   (Which ever is earlier)
along with interest then will not be withdrawn from permission.

In simple language can make payment last up-to 3 months or year end, but will then have to pay interest.

The calculation of Rs 10,00,000 will include all purchases including Non taxable goods and goods purchases within thane.