Under this system, dealers will have to enter online the purchases of goods made within the state from other registered dealers, the refund of input tax claimed and also sales of goods.

To start with, exporters with monthly returns of Rs 10 lakh and above have been directed to compulsorily operate their account online on the department website http://vat.kar.nic.in

The dealer operates the account in the website using the user specific name and password , explains Commercial Taxes Department Commissioner B A Harish Gowda.

To appreciate the system, some basics of the VAT regime first. Under VAT each trader is allowed to reduce the tax paid on their purchases from the tax collected on sales.  In other words, if a retailer has purchased a product worth Rs 112 from a wholesale dealer on which Rs 12 is the tax already paid by the latter, then the retailer is eligible to get back Rs 12 as ‘set-off’ or input tax rebate from the government.

No manual work

“The system will enable us to match whether the claims for refund by the dealer is genuine. It cuts off a lot of manual paper work and area of audit also get reduced. We plan to start the system for large dealers and exporters and then extend the same to more dealers by lowering the turnover limit in a phased manner”, Mr Gowda said.

The dealer has to furnish monthly updates and file the same on or before 20th day of the succeeding month. As many as 5,000 dealers whose monthly return is more than Rs 20 lakh have been directed to register for the online system and whose ratio of output tax to input tax is less than 1.25.

Ratio of output tax to input tax means the aggregate of output tax payable under the provisions of Karnataka Value Added Tax, 2003 as declared by the dealer in the monthly returns filed for the year ending 31st March 2008 divided by the aggregate of input tax deducting claimed during the year.
The process of dispatching the user name and password is currently on.