Is there any provision for compounding system of tax under VAT?
Yes there is. It is available for, on their option: 5 1) The dealers who effects second and subsequent sale in the State. The Act provides tax not exceeding 1% as notified by Government on the turnover for the above dealers whose total turnover for a year is less than Rs. 50 lakhs. Government have notified this rate as 0.5% 2) The Works contractors may opt to pay at compounded rates at 2% (civil), 4% (others) instead of paying tax at the rate prescribed for the goods involved. 3) The hotels, restaurants and sweet stalls may opt to pay tax at compounded rate prescribed in the Act at slab rates where total turnover is not less than Rs.10 lakhs but not more than Rs.50 lakhs. No Input tax credit is allowable to those dealers who have opted for compounded system.
