The introduction of Value Added Tax (VAT) by almost all the States of our country is one of the

importantreformsunderIndirectTaxationanditisalsooneoftherightstepstowardsGlobalisationof

IndianEconomy.

MaharashtraStatehasalsointroducedtheVATintheyear2005.Theguidelinesforimplementingof

VATintheStateshadbeenprovidedbytheEmpoweredCommitteeofFinanceMinistersinWhite

Paperissuedon17thJanuary,2005.ThesaidWhitePaperofEmpoweredCommitteehasrecommended

tohave provisions of CompositionScheme under the Local VAT Act. Para 2.9 of the White Paper

provides,SmalldealerwithannualgrossturnovernotexceedingRs.50lakhs,whoareotherwiseliableto

payVAT,shallhowever,havetheoptionforaCompositionSchemewithpaymentoftaxatasmall

percentageofgrossturnover.Thedealersoptingforthiscompositionschemewillnotbeentitledtoinput

taxcredit.

Accordingly,MaharashtraGovernmenthasprovidedfortheCompositionSchemeinSection42ofthe

MaharashtraValueAddedTaxAct,2002(hereinafterreferredasMVAT),whichcameintoeffectfrom

01/04/05.

InthisarticleanattemptismadetodiscusstheprovisionsofCompositionSchemes(exceptComposition

Scheme for Works contractor) as provided in section 42 of MVAT along with relevant Rules and

Notificationsissuedfromtimetotimeinthisregard.