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Input Tax Credit


Manish Agrawal

2013-12-27

A register dealer under Kanrataka Value Added Tax, 2003; is having its head office at Bangalore and branches outside Karnataka. i.e. Chennai, Raipur, Nagpur , Jaipur, Mumbai, Kota. Now Bangalore, Head office purchase goods local (with in Karnataka) as well as interstate and through stock transfer against “F” form get it transfer to all Branch. Branches do sales in there city and pay the output tax to their concern local VAT office.

(Note : Head Office only do purchase and not having one rupees sales also with in state.)

Here in the above case what will be the treatment of Input Tax paid by Head office on local purchase?, Whether they will be liable for input tax credit.  

CA Pulkit Sharma

2013-12-28

As far as i think the credit available is as follow:

Input Tax credit is available only on the outpur in state and upto CST sales. Since its a stock transfer no input will be available.

Refer section 11 of KVAT:

11. Input tax restrictions.- (a) Input tax shall not be deducted in calculating the net
tax payable, in respect of:
(1) tax paid on purchases attributable to sale of exempted goods exempted under
Section 5, except when such goods are sold in the course of export out of the
territory of India;
(2) tax paid on purchase of goods that are despatched outside the State, other than
as a direct result of sale or purchase in the course of inter-State trade or
commerce;
(3) tax paid on goods including capital goods as specified in the Fifth Schedule and
any other goods as may be notified by the Government or the Commissioner,
purchased 1
[including when transferred in the execution of a works contract] or
put to use for purposes other than for re-sale;
1. Inserted by Act 6 of 2005 w.e.f. 19.3.2005.
(4) tax paid on purchase of capital goods other than those falling under clause (3),
except as provided in Section 12;
(5) tax paid on purchase of goods used as inputs in the manufacture, processing or
packing of other taxable goods despatched to a place outside the State not as a
direct result of sale or purchase in the course of inter-State trade, except as
provided in Section 14;
(6) tax paid on purchases attributable to naptha, liquified petroleum gas, furnace oil,
light diesel oil, superior kerosene oil, kerosene and any other petroleum product,
when used as fuel in motor vehicles, but when used as fuel in production of any
goods for sale in the course of export out of the territory of India or taxable goods
or captive power, input tax shall be deducted as provided in Section 14.
(7) tax paid under sub-section (2) of Section 3 on the purchase of fuel;
(8) tax paid under sub-section (2) of Section 3 on the purchase of goods excluding
fuel, until output tax is payable on such goods or other goods in which such
goods are put to use except when the said goods are exported out of the territory
of India;
(9) tax paid on goods purchased by a dealer who is required to be registered under
the Act, but has failed to register.
(b) Input tax shall not be deducted by an agent purchasing or selling goods on behalf
of any other person other than a non-resident principal.

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CA Sundeep Kamath

2014-01-01

Does special rebating scheme would apply..?

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