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Components of Turnover – KVAT Act

How to determine the turnover of a dealer ?

Rule 9 & 10 of KVAT Rules 2005 describes what constitutes turnover and what is to be excluded while arriving at it

Items to be included :

  1. The amount for which goods are sold by the dealer

  2. The amount for which goods were purchased from unregistered dealer, as this will be liable for Purchase tax u/s 6(2)

  3. Contract amount received in case of a works contractor

  4. Receipts from transfer of right to use

Items to be excluded :

  1.  The amount of Sales returns of the dealer from his customers. Such sales return should be within a period of 90 days from date of delivery of the goods. The accounts should show the date on which goods were returned, date and amount of refund made. Such deduction can be claimed only against the sales effected during that year.

  2. The amount of purchase returns of the dealers to his suppliers. The Purchase return should be within a period of 90 days from the date of delivery. The accounts should show the date of return, date and amount of refund. Such deduction can be claimed only against the purchase effected during that year.

  3. Turnover of Exempted Goods – First Schedule

  4. Freight charges, Delivery charges, Installation charge if charged for separately in the invoice, without including them in the price of goods

  5. Amount realized by a dealer from sale of his business as a whole

  6. Turnover in respect of import, export, interstate trade etc..

  7. Turnover on which the dealer’s agent has paid tax, or where the dealer is the agent, the principal has paid tax. Provided a Declaration in Form 25F is issued by the principal/agent paying the tax.

  8. All amounts collected by way of tax under the Act, and shown separately

  9. The Turnover of Medicine on which tax has been paid by the previous dealer on the MRP and Invoice is issued in Form 8H by such dealer.. A Dealer claiming such exemption should within 30th April every year submit a declaration to the assessing authority in prescribed format.

  10. Turnover in respect of goods covered under KGST Act

  11. Where a works contract results in transfer of property in goods in some other form (other than goods) such part of the turnover which represent the labour portion in respect of a works contract. Out of total contract amount labour charge, machinery hire charges, planning, designing, architects fee, cost of consumables, establishment overheads, profit proportionate to the labour portion shall be excluded.However, the value of material transferred arrived at using the above calculation should not be less that the actual cost of material transferred.

  12. Where the actual turnover of goods involved is not ascertainable from the books of accounts, the taxable turnover shall be arrived at after deducting labour and other charges as given in Table to sub rule 2(b) of Rule 10