Sales Tax Instructions

Sales Tax Instructions, 2009
1. Would the payment of sales tax refund under various SROs be discontinued
after 30.06.1996. ?
No. The rebate SROs will remain operative for the time being, so that there is no
disruption whatsoever of exports. In the meantime exporters will have the option to claim
refund sales of sales tax either under SROs or under the zero-rating system.
2. What is zero-rating ?
Like all other rates of sales tax, 0% is a rate of sales tax at which a supply is made to a
foreign country. While calculating the output tax for exports, the value is multiplied with
the rate of tax, that is, zero. That makes the product equal to zero. When the output tax is
zero, whatever is the input tax becomes due to you from the government. Where you are
making zero-rated supplies, you would be admissible for refund of all tax on your raw
material used in the manufacture of the product.
In order to avail zero-rating, a person has to be a registered person which has its own
obligations. You can have more on it from the booklets ―Should I be Registered for Sales
Tax?‖, ―Keeping Records and Accounts‖ and ―Filling in Your Sales Tax Return-cum-
Challan Form‖.
3. What is exemption ?
As against zero-rated supply, exempted supplies are those where the goods or supplies
are not to be charged sales tax at all. In case of exempted supply, you do not get a refund
of sales tax earlier paid on your raw material. Exempt supplies are outside the chain of
value added tax. Some manufacturers of exempted goods have the opinion to come into
the fold of sales tax by the way of voluntary registrations.
4. Who can register voluntarily ?
The opinion is available to those whose suppliers are outside the normal system on
account to Registration Threshold or because of location in tax-exempt area and not those
who are exempt otherwise, for example, fertilizers. The other categories who can register
voluntarily are importers, distributors, wholesalers and commercial exporters.
5. How do I file an export refund claim ?
You do not have to file a refund claim as such. Your monthly return that you deposit in
the bank is the refund claim for our purpose. You cannot deposit your return (i.e., refund
claim) before the expiry of the month in which export was made by you.
6. Do I have to file a return even if I do not export in any month ?
All registered persons have to file their monthly return irrespective of whether any
supplies were made during the tax period or not. Where supplies are made, they could
either be made locally at the prevailing tax rate or at 0% for exports.
7. What documents do I have to attach with my claim ?
You do not have to attach any documents with your return. You have to submit a
normally monthly return in the bank. Where your input tax is more than your output tax,
a refund is payable to you. We would proceed in a way to make it least difficult for you
to receive your refund cheque.
8. What documents should I retain to enable the collectorate to validate zerorated
supply or other refund ?
When a refund is due a taxpayer, the sales tax department will assess it in terms of risk.
There would be quite a few refund claimants who would be issued cheques in routine.
However, some others may be asked by the collectorate to submit some or all of the
documents in the collectorate:-