1. Small Dealers, engaged in trading activity and a class of notified manufacturers, being Bakery, Bricks manufacturers, having total turnover not exceeding Rs. 50 lakhs in the preceding year, can opt to pay lump sum tax on taxable turnover, in lieu of tax u/s. 7, provided the dealer is not engaged in the activities of Inter State Sale or Purchase or, Transfer to or from outside state branch or agent or, Import or, Export or, Sales/Purchases through Agent or, Works Contract or, Leasing or and Manufacturing activity other than notified manufacturing activity. At present only bakery and bricks manufacturing are notified manufacturing activities.
2. Lump sum Tax Rates notified u/s. 14 are as under
Small Traders @ 0.50% of taxable Turnover
Bakery @ 2.00% of taxable Turnover
Bricks Manufacturer @ 2.00% of taxable Turnover
3. The permission for lump sum payment of tax is valid up to turnover of first Rs. 50 lakhs or so far as the registered dealer is not undertaking any of the above prohibited activity. On turnover exceeding of 50 lakhs, or on undertaking prohibited activity, the dealer shall be liable to pay tax under normal provisions of tax. On turnover exceeding 50 lakhs or on suo moto opting out of lump sum scheme, the ITC of stock of taxable goods held on the date of liability and which are purchased after 1-4-2008 and are of within 1 year purchases, will be admissible on furnishing Form 112, along with the next return due after the exit from lump sum scheme.
4. In addition to lump sum tax at specified rate, the dealer is liable to pay purchase tax under sections 9(1) & 9(3) and also the Additional Tax u/s. 9(6) on such purchases. Further the dealer is not entitled to ITC on his purchases. The dealer can neither issue Tax Invoice nor collect VAT on sales.
5. PROCEDURE FOR APPLICATION FOR LUMP SUM PAYMENT OF TAX
Application for the F.Y. 2006-07 was to be filed before 31-5-2006 in Form 210 and permission for the same will be granted if the dealer is not engaged in the activity of Inter State Sale or Purchase, Transfer from/to Branch/Agent, Import, Export, Sales/Purchases through Agent, Works Contract, Leasing and Manufacturing activity other than notified manufacturing activity. The permission is granted in Form 211 within 15 days from the date of application. Application for permission for subsequent year is required to be made before 30th April of the relevant year. Newly registered dealers have to file application within 90 days from the date of registration. W.e.f. 1-4-2008, a dealer who is granted permission to pay Lump Sum Tax, need not file fresh application for renewal of permission every year.