Sales Tax Systems In India: A P ro file

TAMILNADD

first
The

Ta mi l

Na du

State

in

1939

Act

(the

India

was

erstwhile
which

repealed

General Sales Tax Act,

At present,

State of Madras)

introduced
and

Sales

replaced

by

Tax

the

was the
in

1939.

Tamil

Nadu

1959 with effect from 1.4.1959.

the following enactments

for the

levy of

sales tax are in force in the State.

A. Tamil Nadu General Sales Tax Act,

1959.

B. Tamil Nadu Additional Sales Tax Act,

C. Tamil Nadu Sales Tax

1970.

(surcharge) Act,

D. Central Sales Tax Act,

1971.

1956.

A. TAMIL NADU GENERAL SALES TAX ACT, 1959

1. Structure
Every dealer whose turnover for any year is R s .1 lakh
or

m ore

becomes

goods subject

l i a bl e

to

pay

to single-p oint

tax.

Ho wever,

d ea l e rs

tax

are

required

to

pay

sales

tax

in

Nadu

in
tax

irrespective of turnover.

P oi n t

o f Levy :

Initially,

multi-point

levy.

L ok a n at h a n,

single-point

first

or

sale

introduced
commodities

On

th e

first

for
listed

recommendation

in the

of

was

Shri

P. S.

taxat ion either at the point of

purchase

some

Tamil

or

last

commodities.

first

Schedule

At
of

purchase

wa s

present,

196

the TNGST

Act
218

Sales Tax System s In India: A P ro file

are taxed on single-point basis.

listed
basis.
made

in

S c h e d ul e s

I to

III

Commodities
are

ta xed

which are not

on

mu l t i - p o i n t

Commodities which were taxed at multi-point are also

liable

to single-point tax at the rate of 8 per cent

on their first sales w.e.f 1.4.1990.

Rate

Structure:

subject to

Schedule

single-point

tax,

lis ts

at

rates

4. The minimum rate is 2 per cent,

commodities including raw wool.
liquor)

of

15 per

refrigerators,

VCRs,

cen t

the

196

specified

The maximum rate

applies

to

lu xur y

iron and steel safes,

cent.

at 30 per cent.

IMFL and co u n t ry

Foreign
liquor

in column

applicable to a few more

(excluding

go od s

etc.

liable to tax at 25 per cent and arishtams

taxable

commodities

suc h as

Molasses is

and

asavas

are

liquor is taxed at 50 per

are

Other rates in use are 2, 3, 3.5,

ta xe d

at

4, 5, 6, 8,

25

pe r

cent.

10 and 12 per

cent.

Schedule
special

II

deals

with

goods

importance in inter-State

commodities

declared

to be

trade and commerce.

of

Most

in this Schedule are taxed at 3 and 4 per cent

on single-point basis.

Uniform

single-point

rate

of

on non-specified general

goods

the

reduced

taxes

ar e

either

8 per cent

is

leviable

except those goods on which

or

exempted

through

notification or by including them in Schedule I.

Purchase

Tax:

Purchase

tax

is levied only under certain

circumstances with a view to p r e v e n t i n g

loss

When

to be used in the

a dealer

purchases

taxable

goo ds

of

revenue.

manufacture of other goods but disposes of the manufactured

219

Sales Tax System s In In dia: A P rofile

goods

in a m an n e r

Sta te

or

except

o th e r

despatches

as

inter-State

them

direct
trad e

than
to

result

or

by

of

a place
of

c o mm er ce ,

sales tax is payable by him,

way

within

outside

sale
with

sa l e

in

the

the

the

St ate

course

result

he is liable to

the

of

that no

tax on the

p a y

purchase of such g oo d s .

Works

Con tract:

since 29.5.1984.
turnover

of

Works

Rs.50,000

mentioned

therein.

Taxable

is

liable

Tamil

to

in Schedule
turnover

Nadu

is

taxable

pay

IV

for

at

tax

the

the

on

such works

rates

purpose

specified

of

levy

is

after the deductions as provided in the rules.

L e a s i n g : A transfer
purpo se

in

Any dealer executing works contract with a

contracts

arrived at,

contract

for

ca sh ,

of

right

deferred

to

use

any

payment

or

goods

for

other

consideration is taxable under the TNGST Act.

any

va l u a bl e

Tax is levied

on the aggregate amount received or receivable.

Exe mpt io ns: Tax exempted good s,

include

tobacco,

handloom

cloth

and

sugar,
a

few

li s t e d

cotton
other

and

in

Schedule

woollen

commodities.

fabrics,
Besides,

conditional

exemption,

notifications,

is accorded to the sale/purchase of a number

of goods

through

by certain persons or institutions.

and drinks

by hostels and canteens

benefit of students
in the State,
are

effected

III,

managed

of recognised

Sales

of food

run e xclusively

for the

educational

sales by Defence Services

by the units

themselves,

su ch

ambar c ha r k h a s , etc.

exe mp ti o n ,

institutions

installations which

sales

by

wholesale stores to primary cooperative stores

are included for

special

cooperative
in the State

lisles of h e ar i n g

are also exem;-*

aids,

from tax.
220

Sales Tax Systems In India: A P r ofile

Taxation of I n p u t s - Sale
part s

s p ec if ie d

in

of

raw
I,

S c h e du l e

ma t e r i a l
me an t

to

buying dealer in the manufacture of goods

same schedule)
cent,

on

be

component

use d

form.

the

If the

requisite

declaration

raw materials

and

in

the

manufacture

as

purchasing

the

go od s

the

he

d ea le r

ha d

difference

furnished

declaration

in

comp onent

consumed

which

the

(specified in the

so purchased are not

such,

by

is taxable at the concessional rate of 3 per

f u r n i sh i n g

prescribed

and

in

the
parts

and

sold

respect

should

pay

of
the

of tax payable on the turnover relating to sale

of such goods at the rate prescribed and 3 per cent.

In centi ves
interest
on

the

to I n d u s t r i e s : New industries

free

type

are

granted

loan for a period of 3 to 6 years

of the

industry

whether

SSI,

scale to the 20 to 25 per cent of the

large

an

depending
or

medium

fixed assets of the

industrie s.

2. Registration
Dealers whose turnover of general
or

more

are

under

a s t a t u t or y

goods

obligation

is Rs.75,000
to

Persons dealing in goods enumerated in Schedules

register.
I and

II,

dealers registered under the CST Act, commission agents and

casual

traders

have

to

get

themselves

registered

irrespective of the quantum of their total turnover.

For dealers carrying on wo rk s

right

to

use

the

property,

turnover

contract/transfer
limit

to

register

of
is

R s .40,000.

2 2 1

Sales Tax Systems in India: A P r o file

3. Assessment
Returns: Returns showing actual turnover are required to be
filed on a monthly basis along with the proof of payment of
tax

by

the

showing

20th

the

of

total

the

following

taxable

month.

annual

An

turnover

annual
of

return

theyear has

to be filed by the first of May.

Mode of Assessment: Assessments are made annually.

provides

for

the

completion

assessments.

Provisional

of

and

the

based
the

year
on

estimated

ba si s

of

prescribed
dealer

or

judgement.
the

However,

the

in

re t ur n

the

t he

nature

turnover.

If,

both

assessment

dealer's

form.

i n cor r e ct ,

of

is

of

Final

this

can

which

no

fi l e d

foun d

is

found

is ma d e

to

is

r etu rn

and
the

final
course

assessment
is

fil e d
is

law

made
in

fi led

on
the

by

to be incomplete or

on

the

ba si s

also be made

ha ve

be done within

in

assessment

how eve r,

Such an assessment can

is

is made

of a d va n c e

return

assessment

turnover

provisional

The

es c a p e d

five years

of

best

if any

part

as s e ssme nt.
of the expiry

of the year to which the tax r e l a t e s.

There
year

is

1989-90

a provision
and

onwards

for
in

non-assessees who are eligible,

information

as

to

their

not

deemed

assessments

respect

of

for

the

assesses

and

subject to their furnishing

obtaining

statutory

forms

and

not having contravened the provisions of the TNGST Act and

10 p e r

cent

of

such

cases

assessment orders passed.

are

scrutinised

and

final

Sales Tax Systems in India: A P r o file

4. Penalty and Prosecution

P en al ti es : The TNGST Act provides for the levy of penalty
for various defaults committed by dealers or other persons.

If a d e a l e r
penalty

not

less

does
than

no t

fully

di s c l o s e

50 per cent,

his

but not exceeding

per cent of the tax payable on the undisclosed

the turnover,
the

dealer.

Failure

ce n t

portion

150
of

may be levied after giving due opportunity to

which may not

150 pe r

turnover,

be
of

to

less
the

file
than

return

also

50 per cent

assessed

tax.

attracts
and

Late

not

penalty

exceeding

filing of return

also attracts penalty calculated at the rate of 2 per cent

of tax for each month of default.
for

filing

incorrect

re t u r n

Penalty is also leviable

and

for

collecting

tax

in

contravention of the provisions of the Act.

Prosecution: Certain offences are also punishable with fine

or imprisonment on conviction,

as mentioned hereunder:

Offence

i. Failure to file return as

per law.
ii.

Failure to get certificate of

registration under the Act.

iii. Collection of tax in contravention of the provision of the Act.

i v . Wilful submission of an untrue
r et u r n .

Punishment

Fine upto
Rs.200.
Fine upto
Rs.200.
Fine upto
R s .500.
Fine upto
R s .2000.

223

Sales Tax System s in India: A P ro file

v. Fraudulent evasion of tax.

Simple
imprisonment
upto
six months.

v i . Wilful contravention of any

provisions of the Act.
vii.

-do-

Failure to keep or maintain

a cco unts .

-do-

viii.Failure to make use of goods

according to declaration made
at the time of purchase.

-do-

B. TAMIL NADD ADDITIONAL SALES TAX ACT,

This

Act came

into

force

from

1970

1.4.1970 and

the

rate

of turnover tax applicable presently is as given below:

Taxable turnover tax

Rate of turnover tax

(%)
1.

Turnover exceeding
Rs.10
lakh but not exceeding
R s .40 lakh.

1. 25

2.

Between R s .40 lakh

and
less than Rs.l crore.

1. 50

3.

Between R s .5 crore
R s .10 cr o re .

4.

Exceeding Rs.10 crore.

and

2.50

This tax cannot be passed on to the buyers and should

be paid by the Assesses by the 20th of the following month.

C. THE TAMIL NADD SALES TAX (SURCHARGE) ACT,

1971