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Calculation of Machine's Electricity Consumption for Costing

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Historically, horsepower was the first power unit emerged and widely used around the world. In the middle ages, a horse was one of the most important elements of almost every household, that is why starting from the 18th century, with the development of first steam engines, a horsepower was chosen as a great comparative unit of power.

In our times, there are a few types of horsepower are used. In those countries where the Imperial system is practiced, mechanical or imperial horsepower is used, which is approximately equal to 745.7 watts. Electrical horsepower is a unit that is equivalent to 746 watts. It is usually used for rating electric motors and engines. There is also metric horsepower which has been used in Europe since the beginning of the 19th century. It is equivalent to roughly 735.5 watts.

Horsepower to Kilowatts Calculation

1 hp = 33,000 ft•lbf / minutes 
1 hp = 33,000 ft•lbf / 60 seconds 
1 hp = 550 x 0.3048 x 0.453592376 m•kgf/s
1 hp = 76.04022591264 kgf•m/s 
applying gravity constant
1 hp = 745.699872 N•m/s 
by definition 
1 ft = 0.3048 m 
1 lb = 0.453592376 kg
we need kilowatts
1 kW = 1000 W

1 hp = 745.699872 N•m/s • (1/1000)
1 hp = 0.745699872 kW

Hp to kW Conversion Table

HorsepowerKilowattsRounded Kilowatts
1 hp0.745699872 kW1 kW
5 hp3.72849936 kW4 kW
10 hp7.45699872 kW7 kW
15 hp11.18549808 kW11 kW
20 hp14.91399744 kW15 kW
25 hp18.6424968 kW19 kW
30 hp22.37099616 kW22 kW
35 hp26.09949552 kW26 kW
40 hp29.82799488 kW30 kW
45 hp33.55649424 kW34 kW
50 hp37.2849936 kW37 kW
55 hp41.01349296 kW41 kW
60 hp44.74199232 kW45 kW
65 hp48.47049168 kW48 kW
70 hp52.19899104 kW52 kW
75 hp55.9274904 kW56 kW
80 hp59.65598976 kW60 kW
85 hp63.38448912 kW63 kW
90 hp67.11298848 kW67 kW
95 hp70.84148784 kW71 kW
HorsepowerKilowattsRounded Kilowatts
100 hp74.5699872 kW75 kW
105 hp78.29848656 kW78 kW
110 hp82.02698592 kW82 kW
115 hp85.75548528 kW86 kW
120 hp89.48398464 kW89 kW
125 hp93.212484 kW93 kW
130 hp96.94098336 kW97 kW
135 hp100.66948272 kW101 kW
140 hp104.39798208 kW104 kW
145 hp108.12648144 kW108 kW
150 hp111.8549808 kW112 kW
155 hp115.58348016 kW116 kW
160 hp119.31197952 kW119 kW
165 hp123.04047888 kW123 kW
170 hp126.76897824 kW127 kW
175 hp130.4974776 kW130 kW
180 hp134.22597696 kW134 kW
185 hp137.95447632 kW138 kW
190 hp141.68297568 kW142 kW
195 hp145.41147504 kW145 kW
200 hp149.1399744 kW149 kW

once you worked out  your machine's KW you can easily calculate per day consumption of electricity (KWh*no. of hours machine run time per shift * no of shifts per day*no days factory run in a month)*Electricity charges per KWH (unit)
you will get your machine's electricity consumption cost which will be very helpful in determination of costing of products.


Who can become a partner in a LLP

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1. Who can become a partner in a LLP

a) An individual unless other disqualified 
b) A company incorporated under the Companies Act 1956 or Companies Act 2013
c) A LLP incorporated under LLP Act 2008
d) A LLP incorporated outside India
e) A company incorporated outside India

2.  Who cannot become a partner in LLP?

a) An individual, if:
-  he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;
 - he is an undischarged insolvent; or 
 - he applied to be adjudicated as an insolvent and his application is pending.     
b) A minor
c) A HUF
d) A Partnership Firm
e) An Association of Persons (AOP) or Body of Individuals (BOI)
f) An Artificial Judicial Person
g) A Corporate Sole
h) A Co-operative Society registered under any law for the time being in force 
i) A body corporate which the Central Government may, by notification in the Official Gazette, specify in this behalf;               


Service Tax Registration Procedure

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Procedure for Service tax registration.

1. Create login id on ( )
2. Fill and submit ST-1
Requirements for filling of ST-1
PAN of Firm, Company.
Email ID & Mobile number.
3. Save the Acknowledgement generated after submission of ST-1
4. Collect the required documents as mentioned is acknowledgment.
It  may include :-
Copy of pan card of the proprietor or the legal entity registered.
Photograph and proof of identity of person filling the application namely AAdhar card, voting card,passport,etc.
Document to be establish possession of the premises to be registered : It can be proof of ownership ,Rent agreement in the case of rented premises together with electricity bill and municipal tax receipt.
Details of main bank account through cancelled cheque.
Memorandum/Articles of association/list of directors.
Authorization by the board of directors/Partners/Proprietor for the person filling the application.(In Annexure V Sample given on 2nd page).
Copy of certificates of Business transaction numbers obtained from other government departments or agencies such as BIN NO.,VAT Tin No.,CST No., CIN No.
5. Submit the above documents together with ST-1 and acknowledgement in the service tax department within the seven days from submission of ST-1.
6. Provisional service tax registration certificate will be available on site ( tax/ reg/view/st2)



We, M/s ABC Associates, having registered office at, House no.156,Jay durga Society no. 3,Somalpada,Mani nagar,Mumbai-440011 hereby undertake that on being acceptance of our application dated 13/01/2016 for registration in term of proviso to rule 4(1) of service tax Rules, 1994 read with section 69 of the Finance act, 1994, we shall follow and comply with the below mentioned acts-
1 We agree that record of all the bills/invoices/challans issued and contract/agreement entered into the proper accounting of all the transaction shall be maintained at our proposed registered office and will make available to the Department as and when called for; 
3 We agree that all the records namely invoices/bills/ cenvat availment documents/ challans/ contract/ Agreement and other financial records for the past five years would be kept at the registered office;
5 We shall provide all the documents and information relating to provision of output services, availment of cenvat credit and all other relevant financial or other records, at the time of audit and for any other enquiry;

6 We agree that the service tax department, either through their local officers or from officers of other commissionarate may carry out audit/any other enquiry at the registered premises and for this purpose all records and documents and other necessary support to the audit staff would be provided by us;

7 We would provide the information to the Department regarding the activities of the registered premises including financial information for the purpose of the issue of show-cause Notice or with regard to any enquiry by the Department.

For M/s ABC Associates.
Date : 23/02/2016
Place : Mumbai


Power of attorney for filling service tax registration

Know all men by those presents, we M/s ABC Associates, having registered office at, House no.156,Jay durga Society no. 3,Somalpada,Mani nagar,Mumbai-440011 do hereby constitute, appoint and authorize Shri Suresh Agrawal  aged about 65 years, son of Shri Anil  Agrawal residing at  House no.157,Jay durga Society no. 3,Somalpada,Mani nagar,Mumbai-440011  who is presently employed with us and holding the post of Partner as our attorney, to do in our name and on our behalf, all such acts, deeds and things necessary in connection with or incidental to our service tax registration, including signing and submission of all application documents and providing information/response to the service tax department representing us in all matters before the service tax officials including all other matters in connection with service tax under the Finance Act, 1994 and Rules made there under. 

We M/s ABC Associates hereby agree to ratify all acts, deeds and things lawfully done by our said attorney pursuant to this power of attorney and that all acts, deeds and things lawfully done by our said attorney pursuant to this done by our aforesaid attorney shall and always be deemed to have been done by us and binding us.

For M/s ABC Associates

Witness: 1


Professional Opportunities for Chartered Accountant (C.A.)

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The opportunities for a Chartered Accountant are clearly vast, the scope massive.

For a small and medium practice to grow, the firm has to “THINK BIG”. Success comes only to doers and not onlookers and observers. Success demands maximum efforts. The key to success in life is to have faith in oneself.

There is no shortcut to success. And there is no substitute to hard work. But hard work must be in the right direction in order to yield the fruits of success. If you are prepared to invest your time in activities that generate results from the most potent section of your client base, then the results you will generate will not be marginal but dramatic.
 The secret lies in the Pareto principle 
Pareto principle stipulates that 80% of results are achieved from only 20% of the effort expended. Typically, this principle holds true for a chartered accountant’s practice, where the majority of time is taken up satisfying the needs of clients who represent an insignificant portion of total of business. To counter this situation, the chartered accountant may want to separate clients into three lists: the 'A' list of the upper 20% of clients, and the 'B' and 'C' lists made up of the remaining 80% of clients. The latter two lists should differentiate between clients that have or do not have the potential to become major clients. Accountants should then maintain 'A' list clients, cultivate 'B' list clients, and disregard 'C' list clients.
The following inspiring lines of a poem are relevant
Your reach must always exceed your grasp. That is heaven on earth. Ultimately, your only competition is yourself.
Those who win are those who believe they can.
The listing below is an indication of the opportunities prevalent in various areas

I. Accounting

1. Under IFRS
2. Environmental Accounting
3. Human resource accounting
4. Fraud and Forensic accounting
5. Government Accounting
6. Management Accounting

II. Auditing

a) Statutory Audit
b) Internal Audit
c) Concurrent Audit
d) Stock Audit
e) Revenue Audit
f) Information Systems Audit
g) Tax Audit
h) Quality Audit
 i) Propriety Audit
 j) Legal Compliances Audit
k) Energy audit
 l) Assurance on Sustainability reporting

III. Corporate Governance

IV. Economic and Commercial laws

1. Competition Act 2002
2. Arbitration and Conciliation Act,1996
3. Prevention of Money Laundering Act 2002
4. Micro Small and Medium Enterprises Development Act 2006
5. Laws relating to Intellectual Property Rights
6. Regulations applicable to NBFCs
7. Foreign Exchange Management Act,1999
8. Foreign Contribution (Regulation) Act, 1976
9. Labour Laws
10.Right to Information Act,2005
11. Consumer Protection Act, 1986
12. Special Economic Zones Act,2005
13. Chapter VI of Foreign Trade Policy- 2004-09- 100 % Export Oriented Units (EOU) /
Software Technology Parks( STP) / Electronic Hardware Technology Parks(EHTP) and
Bio- technology parks[BTP]
  • Securitization and Reconstruction of Financial Assets and Enforcement of Security

Interests Act, 2002 (SARFAESI)
  • Recovery of Debts due to Banks and Financial Institutions Act, 1993
  • Drafting and conveyance
  • Carriage laws

V. Carbon Credit

VI. Corporate Laws

  • Members of Judicial bodies
  • Limited Liability Partnership
  • Legal support and advisory services

VII. Taxation

  • Direct Taxes
  • Indirect Taxes
  • International Taxation

VIII. Management Services

  • Strategic Management
  • Change Management
  • Quality Management
  • Disaster Management
  • Knowledge Management
  • Directorship

IX. Consultancy

To elaborate on some of the above,

A) Drafting, Conveyance, Stamping & Registration
Drafting Drafting may be defined as the synthesis of law and fact in a language form. Perfection cannot be achieved in drafting unless the nexus between law, facts and language is fully understood.
The old style of drafting of documents of the Eighteenth Century has given way for comprehensiveness, exactitude and clarity of expressions. “ The particular qualities that distinguish the modern style of drafting – the use of definitions, division into numbered paragraphs and sub-paragraphs with marginal notes, the growing disuse of the form ‘shall’ in stating circumstances and conditions, the use of one word (as ‘convey’ or ‘assign’) for the jumble (grant, bargain, sell, alienate, release, confirm and enforce or bargain, sell, assign, transfer, set-off and confirm) that had often previously been necessary or thought to be so are to be found in any current set of precedents.”- E.L Piesse & Gilchrist Smith: The Elements of Drafting.


The term Conveyance in its ordinary legal parlance means the act of conveying or transferring from one person to another or transfer inter vivos. The Latin term Inter vivos is a legal term referring to a transfer made during one's lifetime, as opposed to a testamentary transfer i.e a transfer that takes effect on death. Conveyancing depends to a large extent on practice, customs and usage, prudence and precedents.
The most common type of documents that illustrate conveyance are a deed of sale, mortgage, lease etc. However, ‘Conveyancing’, used in relation to drafting deeds, is paradoxical as the term ‘conveyancing’ has wider use when its referred in relation to drafting of various other documents like a marriage contract, a will, etc. in which no transfer may be involved.


Registration refers to the recording of the contents of a document with a Registering Officer appointed by the State Government. The State Government may exclude any district or tracts of country from its operation. The Registering Officer performs the important function of preservation of copies of the original document. 
The Registration of documents is made under the provisions of the Registration Act, 1908. The Registration Act 1908 is used for proper recording and registration of documents / instruments, which give them more authenticity


Stamp duty is a form of tax that is levied on documents. Historically, a physical stamp (a tax stamp) had to be attached to or impressed upon the document to denote that stamp duty had been paid before the document became legally effective 

The following categories of Documents generally require drafting:

I Documents for Formation of an Entity

1. Partnership Deed
3. Charitable Trust Deed
4. Cooperative Societies (Rules & Regs)
5. MOA/ AOA of Societies u/ Societies Registration Act,1860
6. LLP Agreement and Incorporation Document
7. Trust Deed / Private Family Trust Deed (Indian Trust Act 1882)

II Wills

III Business Agreements

1. Arbitration Agreement
2. Joint Venture Agreement
3. Foreign Collaboration Agreement
4. Shareholders Agreement
5. Stock Holders Agreements
6. Stock Purchase Agreements
7. Acquisition Agreements
8. Franchisee Agreements
9. Research & Development Agreements
10. Technology Sharing Agreements
11. Advertising Agreements
12. Agency Agreements
13. Service Agreements
14. Consultancy Agreements
15. Hire Purchase Agreements
16. Credit and Conditional Sale Agreements
17. Agreements for Sale, Mortgage, and loan
18. Agreement relating to deposit of title Deeds
19. Tenancy Agreements
20. Franchising Agreements

IV Property Agreements

1. Purchase of a Flat
2. Purchase of an Apartment in a Building (Commercial / Residential)
3. Purchase of a Plot of Land
4. Purchase License of Land /Apartment (Lease / Freehold)
5. Development Agreement
6. Will / Bequest Deed
7. Transfer Deed
8. Power of Attorney
9. Lease Agreement
10. Gift Deed of Property
11. Construction Agreement
12. Rent Agreement
13. Sale/ Purchase Agreement
14. Agreement to Sell
15. Deed of Mortgage of Property
16. Relinquishment Deed
17. Surrender Deed in Cooperative Housing Society
18. Mortgage Deed

V Documents Relating to Intellectual Property

1. Patent and High Technology Agreements
2. Licensing and Franchise
3. Consulting and Know-How Agreements
4. Joint Development Agreements
5. Mass Market Licences like Shrink Wrap and use based licences
6. Licensing of Software and Source Code Escrow Agreements, Motion Pictures for multimedia use, photographs etc.
7. Software Development Agreements
8. Agreement for Sale of Technical Know-How
9. license of use of copy right
10. Agreements relating to protection of designs/ trademarks/ patents/ and know how

VI Banking Documents

1. Bank Guarantee
2. Loan agreements / lease deeds
3. Overdraft agreements

VII Documents for Export / Import

1. Letter of Credit
2. Documents for obtaining EXIM Finance
3. Agency Agreement

VIII Documents relating to Labour Laws and Service Laws

IX Documents relating to Insurance

X Documents relating to Public Interest Litigation, Environmental Issues etc.

XI Documents Relating to Private Equity Form of Funding

1. Business Plan
2. Term Sheet
3. Warranties and Indemnities
4. Disclosure Letter
5. Shareholders' / Investors' Rights/ Subscription Agreement

XII Documents relating to cyber law

1. Internet agreements

2. Software agreements


Chartered Accountants can explore opportunities in this area including formation, Registration,
taxation and foreign direct investment. They can help large scale enterprises form systems to
ensure that they comply with the deadlines for payment of any goods or services supplied by
MSMEs. Also there are opportunities in counseling of MSMEs for the rights and benefits
available to them.

C) Corporate Governance

  1. Designing Code of Corporate Governance
  2. Designing Risk Management Framework
  3. Designing Internal control framework
  4. Designing Whistle blower policy
  5. Internal Audit of Code of Corporate Governance, Risk Management Framework, Internal control framework, Whistle blower policy
  6. Compliance of Internal Audit of clause 49
  7. Statutory auditor’s Certificate regarding compliance of conditions of corporate governance as stipulated in sub-clause VII(1) of clause 49
  8. Management Audit pertaining to various regulatory, statutory or listing requirements (Item 15 of Annex. 1A of clause 49)
  9. chairman of audit committee
  10. Independent director [clause 49 I(A)(iii) meeting a-f criteria]
  11. Assessment of internal control function under clause 49 V -CEO/CFO Certification

D) Carbon Credit

  1. Conceptualizing the project
  2. Drafting Project Concept Note
  3. Quantification of GHG Carbon Footprint
  4. Selection of Cleaner technologies for New projects
  5. Project risk analysis
  6. Making Project/ Project Design Document
  7. Legal and regulatory advice during negotiations with host country Designated National Authority (DNA)
  8. Advice on the appointment of independent validators
  9. Assistance to achieve registration of the project by the CDM Executive Board
  10. Ensure Compliances
  11. Tax structuring and optimization
  12. Assisting planning commission in their study
  13. Carbon Finance
  14. Advise to Govt- Central and state National Action Plan implementation
  15. Energy Audit
  16. Advise to investors about investment in carbon credit
  17. Accounting advisory services
  18. Taxation advisory services
  19. Drafting of Emission Rights Purchase Agreements ERPA

E) Corporate Insolvency and Restructuring

There are a broad range of opportunities that arise from corporate insolvency and financial
  1. Spotting and evaluating distressed companies for restructuring and rescue planning.
  2. Reviewing the various risks involved in restructuring.
  3. Developing risk mitigation strategies.
  4. Working out a detailed bankable financial structure of the business.
  5. Working out a detailed plan for restructuring the business from all angles.
  6. Assessment of distressed assets, cash position, due diligence and turnaround feasibility.
  7. Advice on optimum utilization of resources.
  8. Drafting insolvency petitions.
  9. Representation and registration of sick companies with BIFR.
  10. Representation before the Debt Recovery Tribunals.
  11. Negotiating settlements.
  12. Identifying Areas Of Opportunity for the company.
  13. Advisory in relation to a merger or acquisition or takeover.
  14. Advisory services to management on an ongoing basis.

F) Competition Act, 2002

The Ministry of Corporate Affairs, Government of India has issued a Notification dated 28th
August 2009, whereby the most controversial the Monopolies and Restrictive TradePractices
Act, 1969 (“the MRTP Act”) stands repealed and is replaced by the Competition Act, 2002, with
effect from September 1, 2009. The MRTP Commission will continue to handle all the old cases
filed prior to September 1, 2009 for a period of 2 years. It will, however, not entertain any new
cases from now onwards.

G) Competition Act, 2002

Certification under ESIC in Maharashtra if number of employees are more than 40.

H) Central Excise Act

Audit under Central Excise act is now allowed to be carried out by CAs.


15 Ways to Overcome Stage Fright When Speaking in Public

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15 Ways to Overcome Stage Fright When Speaking in Public

There are two types of people in the world: those who love speaking in public and those who are scared stiff at the thought of it.
Performance anxiety and stage fright are perfectly normal phenomena that occur to many people. It is important for you to understand what stage fright is, so that you can fully overcome it.
Stage fright or performance anxiety is a persistent phobia which is aroused in an individual when required to perform in front of an audience.

So how do you overcome stage fright when speaking in public?

Know Your Stuff
Nothing will stop stage fright in it’s gripping tracks like being prepared. Know your content, your speech and more importantly your audience. If you know what you are talking about then you have no reason to be nervous.
Understanding your topic will enable you to speak more naturally and hence more confidently. Also, should a technical hitch occur, this won’t faze you as you are already confident on the subject.

Practice, Practice, Practice
Knowing your stuff helps, but it doesn’t necessarily eradicate the problem. You need to practice as much as you can before the performance or public speaking d-day.
Really know your content inside out and practice (preferably in front of a live audience) as much as possible to build your confidence.

Talk Yourself Down
You need to realize that even though stage fright is “all in the mind,” the fear manifests itself in physical ways. The best offence is to change your negative talk. Stop worrying about, “What if I forget the content?”
Change that into positive talk like, “What if I am great at this?” It may sound simplistic or too easy, but positive affirmation will go a long way in reducing stage fright when speaking in public.

Visualize the Outcome
Call it what you will: reflection, visualization, meditation. Whatever you call it, just do it. Spend time visualizing yourself giving a perfect presentation and speaking in public – filled with humor, warmth, confidence and intelligence.
The more you imagine being great, the more likely you will achieve it.

It is Not All About You
Though you might feel like everyone is out to laugh, criticize or judge you, that is not the case. Get over the feeling that the world is going to hang on your every mistake.
Focus on your speech, audience and what they deserve from you. This will ease the pressure that is already accumulating.

When Things go Wrong
Sooner or later, something will go wrong. Your projector or microphone might stop working. If you already know your content, then chances are that this won’t faze you as much. If, for instance, your microphone stops working, don’t stress over it, carry on with a louder voice. Chances are the technical people are already stressing and working to sort the problem out, so you getting worried over the same issue won’t help.

Keep Calm, Don’t Rush It
Don’t rush your presentation. Start slow and allow yourself time to get into a comfortable pace. You need time to get used to the audience and the audience also needs time to get used to you.

Focus on Getting Through the First 5 Minutes
Imagine your entire presentation is only five minutes long. This will make it less stressful. Focus on just getting through the first five minutes and by this time you will have already calmed down and the rest is downhill.

Never Apologize for Being Nervous
Three quarters of the time, no one will notice you are nervous. Why tell them? You may feel yourself shaking and shivering, but your audience might not be aware of it. Don’t mention it. It will make your audience nervous too and they will be too worried about your performance to get much out of your presentation.

Don’t Share Your Mistakes
You have prepared, practiced and feel good about your speech or presentation. Suddenly, on stage you realize you mixed the order of topics or you forgot an important point. But remember, you’re the only one who knows about this. Your audience doesn’t. So, don’t make them aware of a mistake that they didn’t even know existed. If you bring it up, some people might start looking for more holes, which ultimately distracts from the whole purpose of your presentation in the first place.

Arrive Early
Obviously, if you are late, this will only heighten your anxiety. Arrive early and acclimate to your surroundings. You can even check out the stage and the auditorium as get yourself used to the environment.

If you are nervous, odds are your body will be stiff and your muscles tight. Fifteen minutes before speaking in public and going on stage, do a few stretches. This will loosen the tense muscles and relax your body.

Nervousness is always accompanied by fast, short breaths and if this is not addressed, it will throw you off balance. Minutes before you go on stage, take some slow, deep breaths, so that by the time you get to the stage your breathing is relaxed.

Double Check Everything
Do you have a laptop or notes? Check that everything works. When you walk on stage and suddenly realize that you forgot your notes, it’s too late. Of course, your nerves will take over. Know your speech or presentation so well that should this happen, you can continue without a hitch.

Don’t Fight Your Stage Fright … Work With It
You have to expect and accept the fact that you will feel anxious, especially the first few minutes of your presentation. The more you resist your anxiety, the more it will work against you.  Again, focus on the presentation when speaking in public and the anxiety will slowly ease off.


Taxation (VAT) on Developer's ~ Frequently Asked Questions [FAQ]

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Taxation on Developers
1. What is the effective date from which the VAT will be applicable for sale of under constructed flat? -
Ans: The VAT is payable from the date of amendment i.e. 20 June, 2006.
2. On what type of contracts the VAT is payable?
Ans: VAT is payable in respect of sale of under construction flat.
3. Whether VAT is payable on the sale of completed flat?
Ans: VAT is not payable if a completed flat is sold by the developer.
4. How is VAT calculated? Is it on under construction or ready flats?
Ans: It is on under construction flat not on ready flats.
5. Who has to pay VAT; Flat buyer or Developer?
Ans: The liability to pay VAT is on developer.
6. Who has to pay VAT if a developer has not told the buyer of VAT to be paid when he purchased flat post 2006?
Ans: The developer has to pay the VAT.

7. What is the rate of tax under VAT Act applicable for agreement to sell for under construction flats?
Ans: Tax rates would be those which apply to the goods in which property is transferred.
8. The agreement to sell the flat was executed before 20.06.2006 and the building was under construction and possession is given after 20.06.2006. Whether the VAT will apply in such case because the agreements were executed prior to 20.06.2006? If yes how the sale value will be determined for calculation of VAT? Whether the amount received prior to 20.06.2006 will be exempt from VAT? .
Ans: Yes. VAT will apply. It will be levied on value received or receivable after 20th June, 2006.
9. Whether the levy of VAT on agreement for under construction flats/ shops etc. is covered with in the amended definition of Works Contract? When is it not leviable?
Ans: Yes. It is covered. If the sale is after completion, there is no levy of VAT.
10. What are the various options available to the developers for disclosing tax liability?
Ans: Developers can discharge their tax liability by any of the following option:-
From 20.06.2006 to 31.03.2010
1. Composition Scheme U/s 42 (3) - Under this scheme developer
has to pay 5% tax on the agreement value. Land deduction is not available. Input tax credit is available subject to the reduction of 4 per cent.
2. Actual Expense Method U/r 58- Under rule 58, the deduction of Labour & service charges is available on actual basis. Land deduction is also available. Set-off will be calculated subject to the conditions u/r 53 and 54.
3. Standard Deduction Method U/r 58- Under rule 58, the
deduction of land cost will be allowed. Thereafter, 30% standard deduction from remaining amount will be available as per proviso to sub-rule 1. Set-off will be calculated subject to the conditions u/r 53 and 54.
After 01.04.2010
The developers can opt for fourth option also, under this
option u/s 42 (3A), developer has to pay 1% tax on agreement
value. No land deduction and input tax credit is available.
Needless to mention that, the developers will be required to
make the payment of interest according to the provisions of law.
11. Whether the developers will be eligible to claim set-off of VAT paid on purchases?
Ans: Yes. The Purchases made on or after 20th June, 2006, will be eligible for set off subject to MVAT rules. However, if the developer opts for 1% composition scheme for agreements registered from 1/4/2010 onwards, then no set off is eligible.
12. If composition scheme is not opted then what is the rate of tax and how the sales price will be determined? What are the deductions permissible like labour charges, profit margin etc. In such cases how the set off will be worked out?
Ans: Deductions are available as per rule 58. Set-off will be worked out as per rules 52, 53 and 54.
13. In the system, return cannot be accepted for old period prior to date of registration. What is the situation?
Ans: The periodicity for earlier period will be set manually. Necessary instructions have been issued to help desks. Developers are requested to contact to help desk officer.
14. Whether the credit of input tax paid while effecting purchases of materials like cement, iron & steel etc. required to be used in the Construction project, will be available?
Ans: Yes, they will get input tax credit of the taxes paid on purchases subject to the set-off rules.
15. If an Agreement to Sell is prepared much in advance at the time when a prospective buyer book the accommodation in a building under construction and the developer concerned undertakes to give possession of the accommodation so booked after obtaining completion certificate. At what point of time the VAT under the amended law would be payable?
Ans: Tax is levied as and when the installments become due and payable or are received, whichever is earlier.
16. Many times mere advances are received and agreement is executed much later. What will be the point of liability whether at the time of receiving the advances or at the time of execution of the agreement or thereafter on possession?
Ans: Tax will be levied from the date of the agreement. The amount of advance, as and when it is adjusted towards the agreement amount, will be taxed.
17. The builders receive non-refundable deposits and other charges under the agreement such as electricity deposit, water charges, legal charges, development charges etc. Whether such receipts will also form part of sale price for VAT? 
Ans: The amounts which are received as deposits will be a deduction to the extent such amounts are actually paid to other authorities. 
18. In under construction flats, the amounts are received in
installments. How the sale price will be determined? Whether the actual receipts will be taken as sales or the whole of the agreement value will be taken as sale at the time of execution of the agreement, even though the amount is yet to be received?
Ans: Received or receivable. Receivable means due and payable.
19. Can the VAT applicable in above cases be collected by raising a debit note or the same should be mentioned in the agreement itself?
Whether VAT should be collected on each installment or at one go upon execution of the agreement?
Ans: Yes. It can be collected by raising a debit note. Specific mention in the agreement is a choice of the contracting parties. It will be payable on the installments received.
20. Whether any interest or penalty will be attracted for non-registration with sales tax authorities under VAT and non-submission of VAT returns for the transactions executed for sale of flats/ shops under construction between intervening period i.e. 20.06.2006 to 07.02.2007?
Ans: Please refer to circular 14T of 2012 Dt. 6th August, 2012.
21. What will be the VAT implications where mere advances are received from buyers and agreement for sell is not executed with the buyer?
Ans: There is no tax liability.
22. If a project based partnership firm is created for the project which commenced in the year 2006 and completed in the year 2008 and stands dissolved as on today and the bank account is also closed as of now, then what would be the legal implications of producing the partnership deed that is already dissolved for obtaining MVAT registration?
Ans: The developers have to provide evidence for the period when the firm was in existence. The necessary instructions have been issued to the registration authorities. Dealer may contact to respective registration authority in this regard.
23. Whether a possession letter or letter from architect can be termed as completion of building. Who is the proper authority to grant the completion letter? Sometimes application for completion is made but completion is granted much later in such case whether date of application is considered to be the date of completion?
Ans: Whether sale is of a completed flat is to be ascertained from books of accounts. Necessary clarification had been issued in Trade Circular 12 T of 2007 dt. 7/2/2007.
24. In the event where an agreement entered into is cancelled and said flat is sold to someone else and the agreement is again entered. What would be the VAT implication for the first sale and the second one?
Ans: If the first sale of flat is cancelled then the subsequent sale of the same flat by the developer is taxable. The tax paid on first sale can be adjusted towards subsequent sale.
25. If builder constructs the flat on the land which is owned by land owner and out of the constructed flats some flats are given to land owner and other flats are sold by builder to prospective buyer. Land owner sales the flat afterwards to buyers. In such instance what will be the point of taxation? Whether land owner is liable to pay the VAT on sales of flats which were handed over to him by builder?
Ans: Builder is liable to pay tax only in respect of sale of flats to prospective buyers. The flats which are given to land owners will not be taxable. The land owner when subsequently sales the flat will not liable to pay any tax as he is not a dealer.
26. Out of the three different methods of tax working, the
builders/developers are given option to choose a method of their choice with a restriction that method should be applied to whole of the project concerned and no deviation is permitted. It may happen that in a project having execution period of more than 2 years, there may be possibility that some flats may have been sold before 31.03.2010 and some may be sold after 31.03.2010. In that scenario, whether the flat purchasers who have entered into an agreement after
31.03.2010 will be entitled to pay VAT to the developers @ 1% of Agreement Value?
Ans: The composition scheme of 1% is applicable in respect of
agreement registered on or after 1st April 2010, irrespective of the method adopted for periods prior to 01/04/2010. However, set-off or deductions earlier claimed in respect of such agreements will have to be reversed.
27. Most of the development/redevelopment projects involve purchase of Transferable Development Rights (TDR) as these are related to land only, the cost of TDR should also be available as deduction from sale price, along with cost of land. 
Ans: Yes, the cost of TDR will be available for deduction from sale price along with cost of land.
28. A scheme was launched in 2005-06. Major purchases of cement and steel were effected during the year 2005-06. The purchases effected after 20.06.2006 are much lesser as compared to those effect prior to it. Sales of flats were effected during 2007-08, 2008-09, 2009-10 etc. that is after 20.06.2006. Dealer is liable to pay tax on all these sales as there was no completion certificate. Even if he chooses to discharge liability by way of composition @ 5%, he is losing set-off of taxes paid prior to 20.06.2006. In the normal course this set-off is not admissible as per provisions of law. Whether such cases can be dealt with administratively? In addition to taxes whether there will be burden of interest for these old periods?
Ans: Developer will not be entitled for set-off on purchase effected prior to 20/06/2006. Interest will be payable in addition to taxes paid.
29. If the builders/developers commences project of 100 flats and the said project is sold for three years 2007-08, 2008-09 and 2009-10, like 30 flats in first year, 40 flats in next year and 30 flats in third year. Whether builder/developer is allowed to claim land deduction proportionately in three years or in first year only?
Ans: He may claim land deduction in first year or proportionately in three years.
30. The builder had sold and registered one flat in January 2010 and three flats in May 2010. Can builder pay VAT for one flat as per Standard Deduction Method u/r 58 and on balance three flat pay 1%?
Can he pay 1% tax under Composition Scheme u/s 42(3A) for all the four flats as on today? Can he change the method of tax in same project after 01.04.2010 under Composition Scheme u/s 42 (3A)?
Ans: He is not allowed to take benefit of 1% Composition Scheme u/s 42(3A) for flats sold and registered in January 2010. The composition scheme u/s 42(3A) at 1% of agreement value is applicable for agreement entered on or after 01.04.2010.
31. In the course of construction project what will be the impact of land cost when it is incurred or paid prior to 20-06-2006 and there is no land cost there after i.e. within the period: 20/06/2006 to 31/03/2010
Ans: You may claim the deduction of land cost at the time sales.
32. Developer has started construction of a project prior to 01.04.2006 consisting of about 100 units. The work was started in the year 2005 and completed in 2008.
Whether it has to pay MVAT in respect of all the 100 units or only the units sold under construction i.e. 30 units and not on 70 units which have been sold after construction was completed, occupation certificate obtained and documents registered.
Ans: The taxability will arise only in respect of transfer of property after 20/06/2006. Please refer to Trade Circular 14 T of 2012 dated 06 August, 2012.
33. While calculating the liability for the period from 20/06/2006 to 31/03/2010, some developers have effected purchases in one year and there are no sales in that year. As a result there is a refund. In the second year, there are sales. Can we adjust the refund of first year to second year?
Ans: As per the provisions of MVAT Act, refunds cannot be carried forward from one year to next year. However, it has been decided administratively that in respect of developers the carried forward of refund from one year to next year will be allowed for the period from 20/06/2006 to 31/03/2010.
34. A buyer has purchased ready flat in April 2006 when no VAT was in place. Building society got formed in 2008/2009. Can the developer ask VAT from such buyers?
Ans: Since it is a sale of completed flat, no VAT is payable.
35. A buyer has purchased under construction flat in 2009. Following discussions with the developers, he put 5% as VAT to be paid in an escrow account. Will VAT remain at 5% or would the buyers have to shell out extra for interest for not paying VAT over the past three years?
Ans: Considering the various options available to developers, the liability may come much less than 5 %. However, the developers are also required to pay interest for late payment of taxes.
36. If the buyer refuses to pay VAT more than 5% as per Government’s order, does the developer have any right to demand more VAT?
Ans: The liability to pay VAT is on developer. It is not contingent on collection by developer. However, whatever option the developer chooses to discharge the tax liability, the net burden will be less than 5%.
37. Was the recent Bombay High Court order in reference to paying 1% VAT?
Ans: High Court has upheld the composition scheme of 1% w.e.f. 01/04/2010. Also, the High Court upheld the amendment to definition of “Sale” from 20/06/2006.
38. If the Builder, Developer has commenced the construction in 2006-07, initially for two years there was no sales, there were only purchases for first two years, i.e. 2006-07 and 2007-08, the sales agreements were effected in the year 2008-09. Whether the dealer can claim refund for the first two years or can he carry forward the set-off of first two years to next financial year.
Ans: He can carry forward the set-off of first two years to next financial year for the period from 20/06/2006 to 31/03/2010.
39. If the dealer has effected purchases in one year and part sales of flats has taken place in that year and part of the sales in next year, How the set-off to be granted, set-off to be granted proportionately or full set off in first year?
Ans: Set-off is based on purchases. He may claim full set off in the year in which purchase are made. However, if he discharge the liability @ 1% under composition scheme for agreement entered on or after 01/04/2010, then he is required to reverse the set-off proportionately, if it is already claimed.
40. In the first year of construction projects, purchases, expenses and land purchases are more in comparison to less sales or less agreements, therefore whether the Builders, Developers can carry forward the ITC, land Deductions to periods of next year as sales in next year are substantial.
Ans: The Builders, Developers can carry forward the ITC; land Deductions to periods of next year for the period from 20/06/2006 to 31/03/2010.
41. At what point of time deduction has to be given in respect of value of undivided share in Land u/r 58(1A). Whether such value of land be deducted from first few installments till the value of land is covered and thereafter deduction for payment made (or to be made) to subcontractors and from the final installments reduction on account of other services (as per Table), or all these deductions have to be apportioned proportionately on all the installments (as and when amount received from the purchaser/s). And the periodic taxable value should be calculated accordingly.
Ans: The developer may apply the initial installments towards cost of land.
42. During the period 2006-2010, since there are huge purchases of material during 1st year, so developer has to claim refund and after that there are dues due to sell of flats. What will be the position? Can he carry forward his refund to the next year?
Ans: Yes. He can carry forward it to next year for the period from 20/06/2006 to 31/03/2010.

43. The developers have complained that contrary to the High Court order of 2007 and 2012, sales tax department have erred in considering them as dealers and demanding high tax from them?
Ans: Hon’ High Court had upheld the amendment to MVAT Act and levy of tax on sale of under construction flats.
44. What action is the government planning to take on behalf of consumers if VAT of 5% is collected post 2010?
Ans: The excess collection of tax if any shall be liable for forfeiture.