20. Input Tax Credit.
1) After the commencement of the Act, where any dealer gets registered as a VAT dealer or where the authority prescribed registers any dealer as a VAT dealer under Rule 11 (1), such dealer shall be eligible for input tax credit as provided under sub-section (2)(b) of Section 13. The claim shall be made on Form VAT 118 within 10 days from the date of receipt of VAT registration. The goods on which the input tax credit is claimed or allowed shall be available in stock on the effective date of VAT registration. The documentary evidence for such claim shall be on the basis of a tax invoice issued by a VAT dealer for the purchases made and the input tax credit allowed on Form VAT 119 shall be claimed on the first return to be submitted by such dealers. The prescribed authority shall issue such Form VAT 119 within 10 days of receipt of Form VAT 118.
2) The following shall be the items not eligible for input tax credit as specified in sub-section (4) of Section 13,-
a) all automobiles including commercial vehicles / two wheelers / three wheelers required to be registered under the Motor Vehicles Act 1988 and including tyres and tubes, spare parts and accessories for the repair and maintenance thereof; unless the dealer is in the business of dealing in these goods.
b) fuels used for automobiles or used for captive power generation or used in power plants;
c) air conditioning units other than used in plant and laboratory, restaurants or eating establishments, unless the dealer is in the business of dealing in these goods.
d) any goods purchased and used for personal consumption.
e) any goods purchased and provided free of charge as gifts otherwise than by way of business practice.
f) any goods purchased and accounted for in the business but utilized for the purpose of providing facilities to employees including any residential accommodation.
g) crude oil used for conversion or refining into petroleum products;
* h) natural gas and coal used for power generation.
h) Natural gas, naptha and coal unless the dealer is in the business of
dealing in these goods.”
(* substituted by GOMS No 2201 Dt 29th Dec 2005 w.e.f 1-4-2005)
i) any input used in construction or maintenance of any buildings including factory or office buildings, unless the dealer is in the business of executing works contracts and has not opted for composition.
j) earth moving equipment such as bulldozers, JCB’s, and poclain etc., and parts and accessories thereof unless the dealer is in the business of dealing in these goods;
k) generators and parts and accessories thereof used for captive generation unless the dealer is in the business of dealing in these goods.
* l) any goods (except kerosene) purchased or procured for supply through Public Distribution System (PDS)-As a result of this restriction on in put tax credit for the goods (except kerosene) purchased for the purpose of Public Distribution System (PDS), the corresponding sales will not be liable to any tax. Accordingly the Food Corporation of India or Andhra Pradesh State Civil Supplies Corporation Limited, will be liable to pay tax only, if their sales are first sales. They will not be liable to pay any tax on the sales of goods (except kerosene) purchased from local Value Added Tax Dealers and they will also be not eligible to claim any input tax credit for such purchases. Fair Price Shops are acting as agents on behalf of the State Government i.e., a resident principal. As such, fair price shops do not have any liability to register under Andhra Pradesh Value Added Tax Act, 2005 and to pay any tax. However, if the fair price shops are dealing in any other goods not supplied through Public Distribution System, they will be liable to register under Andhra Pradesh Value Added Tax Act, 2005 depending on their turn over of such goods and will have to pay tax accordingly.
*(added by G.O.Ms.No.1452, Revenue (CT.II), 26th July, 2005 w.e.f 1-4-2005)
l) rice purchased by Food Corporation of India from VAT dealers or
farmers or farmers clubs or associations of farmers in the State.
( Substituted by the G.O MS No.1675 Dated: 23rd September, 2005
w.e.f 1-4-2005)
m) rice purchased by Andhra Pradesh State Civil Supplies Corporation
Ltd., from the Depots of Food Corporation of India, in Andhra Pradesh
or from any other VAT dealer in the State.
( added by the G.O MS No.1675 Dated: 23rd September, 2005
w.e.f 1-4-2005
n) refrigerators, coolers and deep freezers purchased by Soft Drink
Manufacturers not for use in their manufacturing premises.
o) any goods purchased and used as inputs in job work
p) PDS Kerosene purchased by wholesale dealers for the purpose of
supplying to Fair Price Shops.
(Clauses (n),(o) and (p) are added by G.O MS No 2201 dt 29th Dec 2005 w.e.f 1-4-2005)
(q) Furnace Oil, LSHS and other similar fuels, used in the furnaces and boilers of the factories or manufacturing or processing units.
When any goods mentioned above are subsequently sold without availing any input tax credit, no tax shall be levied and recovered from a VAT dealer having been denied the input tax credit at the time of purchase. Any VAT dealer having purchased items mentioned above shall maintain a separate account or record without including such purchases in the purchase of eligible inputs taxable at each rate.
Whenever a VAT dealer makes a claim for input tax credit for any tax period, the tax paid on the purchases of above goods shall be excluded for arriving the eligible input tax credit. This principle applies to all the sub rules in this rule.
3) Where all the sales of a VAT dealer for that tax period are taxable, the whole of the input tax may be claimed as a credit excluding the tax paid on the purchase of any goods mentioned in sub-rule(2).
*3-a) Where any VAT dealer pays tax at the rate of twelve and half percent (12.5%) on the sale consideration of a used or a second hand vehicle already registered in the State under the Motor Vehicles Act,1988, he shall be eligible for notional input tax credit at the rate of twelve and half percent (12.5%) on the purchase price actually paid supported by documentary evidence. Such notional input tax credit shall not exceed the output tax payable on the sale of used or second hand vehicle by the VAT dealer.
*( Sub- rule (3-a) was added by the G.O.Ms.nO.1614, Revenue (CT.II), 31st August, 2005 w.e.f 31-8-2005)
4) a) Where any VAT dealer buys and sells the goods in the same form, the input tax credit can be claimed fully in respect of all the taxable goods purchased for every tax period excluding the tax paid on the purchase of any goods mentioned in sub rule (2). Such VAT dealer is required to make a declaration in the Form VAT 200D for every tax period along with tax return.
b) Where any common inputs like packing material are used commonly for sales of taxable and exempt goods (goods in Schedule I), the VAT dealer shall repay input tax related to exempt element of common inputs after making adjustment in the tax return for March by filing Form VAT 200B for the period of twelve months ending March. In Form VAT 200B, the eligible input tax credit shall be calculated by applying formula
A x B
C
Where———
A is the total amount of input tax for common inputs for each tax rate excluding the tax paid on the purchase of any goods mentioned in sub-rule (2).
B is the sales turnover of taxable goods including zero-rated sales
C is the “total turnover” including sales of exempt goods
c) This sub rule is not applicable if the VAT dealer is making exempt transactions.
5) a) Where the value of taxable sales is 95% or more of the total value for that tax period, the VAT dealer may claim credit for the full amount of input tax paid on purchases
b) Where the value of taxable sales is 5% or less of the total value, the VAT dealer shall not be eligible to claim input tax credit for that tax period;
c) Such a VAT dealer covered under clause (a) and (b) above, shall make an adjustment in the month of March for the 12 month period ending with March on Form VAT 200B. In the Form VAT 200B, the eligible input tax credit shall be calculated by applying formula A x B/C. The excess input credit claimed shall be paid back or the balance input credit eligible can be claimed in the tax return for March.
d) This sub rule is not applicable if the VAT dealer is making exempt transactions
6) Where any VAT dealer is able to establish that specific inputs are meant for specific output, the input tax credit can be claimed separately for taxable goods. For the common inputs, such VAT dealer can claim input tax credit by applying the formula
A x B
——
C
for the common inputs used for taxable goods, exempt goods (goods in Schedule I) and exempt transactions:
Provided the VAT dealer furnishes an additional return in Form VAT 200A for each tax period for adjustment of input tax credit and also makes an adjustment for a period of 12 months ending March every year by filing a return in Form VAT 200B.
7) Where a VAT dealer is making taxable sales and sales of exempt goods (goods in schedule I) for a tax period and inputs are common for both, the amount which can be claimed as input tax credit for the purchases of the goods at each tax rate shall be calculated by the formula
A x B .
C
Provided the VAT dealer furnishes an additional return in Form VAT 200A for each tax period for adjustment of input tax credit and also makes an adjustment for a period of 12 months ending March every year by filing a return in Form VAT 200B.
8) a) Where a VAT dealer is making sales of taxable goods and also exempt transactions of taxable goods in a tax period, for the purchases of goods taxed at 12.5%, the input tax to the extent of 8.5% portion can be fully claimed in the same tax period;
b) In respect of purchases of goods taxable at 1%, 4% and for the 4% tax portion in respect of goods taxable at 12.5%, the VAT dealer shall apply formula
A x B .
C
for each tax period:
Provided the VAT dealer furnishes an additional return in Form VAT 200A for each tax period for adjustment of input tax credit and also makes an adjustment for a period of 12 months ending March every year by filing a return in Form VAT 200B.
9) a) Where a VAT dealer is making sales of taxable goods, exempt sales (goods in Schedule I) and also exempt transaction of taxable goods in a tax period, for the purchases of goods taxed at 12.5%, the input tax to the extent of 8.5% portion can be provisionally fully claimed in the same tax period;
b) In respect of purchases of goods taxable at 1%, 4% and for the 4% tax portion in respect of goods taxable at 12.5%, the VAT dealer shall apply formula
A x B .
C
for each tax period:
Provided the VAT dealer furnishes an additional return in Form VAT 200A for each tax period for adjustment of input tax credit and also makes an adjustment for a period of 12 months ending Mach every year by filing a return in Form VAT 200B.
10) a) In the case of a VAT dealer filing Form VAT 200B, the excess input credit claimed including 8.5% provisionally claimed for sales of exempt goods shall be paid back or the balance input credit eligible can be claimed in the tax return for March;
b) For the purpose of this rule, the words A,B and C in the formula
A x B .
C
shall carry the following meaning subject to clause (c) below —-
A is the total amount of input tax for common inputs for each tax rate for the tax period; excluding the tax paid on the purchases of any goods mentioned in sub-rule(2);
B is the “taxable turnover” as defined under the Act for the tax period, which shall include zero rated sales of any goods – inter state sales, exports and deemed exports.
C is the “total turnover” as defined under the Act.
Both the values of B and C shall not include –
(i) purchase price of goods taxable under Section 4(4) of the Act;
(ii) transactions falling under Section 5 (2), (import) Section 6 (2) of the CST Act, 1965
(iii) value of transfer of business as a whole;
c) Where a VAT dealer makes exempt transactions for the calculation of input tax credit in excess of input tax of 4% for 12.5% rate goods, “the value of B” shall include the value of the goods transferred outside the State otherwise than by way of sale (transaction falling under Section 6(a) of CST Act 1956).
d) For the purpose of sub-rules from (4) to (9) of this Rule, the value of A is the amount of input tax relating to common inputs for each tax rate, B is the taxable turnover and C is the total turnover. For the purpose of Form VAT 200A, the value of A, B and C would be for that tax period whereas for the purpose of Form VAT 200B, the values of A, B and C would be the values for the period of 12 months ending March including March
e) Any VAT dealer opting for any method of input tax credit calculation specified from sub-rule (5) to sub-rule (9) shall be required to be under only one method for 12 month period ending March. The method of adjustment to be made in the return for March shall be on the basis of latest option exercised by the dealer upto March.
11) The Deputy Commissioner concerned may impose any conditions or a particular method for a VAT dealer for the apportionment of input tax credit where the VAT dealer makes taxable and exempt sales and or exempt transactions.
12) Where a VAT dealer opts to pay tax by way of composition or where a VAT dealer is exempt under Rule 17(2) (j), such dealer shall furnish Form VAT 200E along with Form VAT 200 for each tax period. Such VAT dealers shall calculate for each tax period the eligible input tax credit by excluding the turnover or value relating to composition/exemption in Form VAT 200E. In addition the VAT dealer shall furnish an adjustment return in Form VAT 200F for the month of March for a period of 12 months ending March making an adjustment of input tax credit in the Form VAT 200F.
ILLUSTRATIONS FOR RULE 20
1. VAT dealers following sub-rule( 3) of Rule 20:
(only taxable sales)
TYR, a VAT dealer is dealing in sales of Readymade garments and Footwear which are taxable at 4% % and 12.5% respectively under the provisions of the Act. TYR is not dealing in sales of any exempt goods. TYR also purchases packing material and certain other goods required for business. The procedure for claiming input tax credit for a month is illustrated below:
PURCHASES ( INPUT) SALES ( OUTPUT)
RATE OF TAX TURNOVER VAT PAID TURNOVER VAT PAYABLE
4% Goods 1,00,000 4,000 60,000 2,400
(Readymade
garments &
Packing material)
12.5% Goods 2,00,000 25,000 2,20,000 27,500
( Footwear &
other goods)
TOTAL TOTAL
INPUT TAX 29,000 OUTPUT TAX 29,900
VAT payable = Output tax – Input tax
= Rs.29,900 – Rs.29,000
= Rs.900
NOTE: No adjustments need to be carried since the dealer is dealing only in taxable goods.
2. VAT dealers following sub-rule( 4) of Rule 20:
(Resellers of taxable goods and exempt goods)
TVK, a super market, registered for VAT is dealing in taxable goods (Soaps, Cosmetics, Foodgrains etc) and exempt goods (Sugar, milk, vegetables etc). TVK buys and sells these goods in the same form every month and also purchases packing material and other goods required for his business. For a tax period, TVK can claim input tax credit as under:
PURCHASES ( INPUT) SALES ( OUTPUT)
RATE OF TAX TURNOVER VAT PAID TURNOVER VAT PAYABLE
4% Goods 1,00,000 4,000 1,20,000 4,800
12.5% Goods 1,00,000 12,500 80,000 10,000
Exempt goods 50,000 NIL 40,000 NIL
4% goods like
packing material
used as common
inputs for both
taxable &
exempt goods 10,000 400 NIL NIL
12.5% goods
used in business
common for both
taxable and
exempt goods 20,000 2,500 NIL NIL
TOTAL TOTAL
INPUT TAX 19,400 OUTPUT TAX 14,800
VAT payable/Credit carried over = Output tax – Input tax
= Rs.14,800 – Rs.19,400
= (+) Rs.4,600
Credit carried over to next month.
Since TVK has availed full input tax credit on common inputs in the monthly returns:
(i) the VAT dealer should make declaration in the Form VAT 200D for each tax period indicating the details of sales of taxable goods and exempt goods and also details of common input tax and input tax paid on taxable goods meant for sale and input tax claimed in the monthly return. No adjustments need to be made for every tax period.
(ii) the dealer is required to submit a return in Form 200B for March to repay input tax related to exempt element of common inputs after making adjustment of input tax credit for the period of twelve months ending March for each tax rate.
At the end of March, the turnovers relating to last 12 months are as under: (Adjustments to be made in Form VAT 200B)
1. Total taxable turnover for 12 months : Rs.50,00,000 -B
2. Total sales of exempt goods for 12 months :Rs.10,00,000
3. Total turnover for 12 months : Rs.60,00,000 -C
(Sl.No.1 + Sl.No.2)
4. Common input tax paid & claimed for
12 months on 4% goods : Rs. 4,800-A for 4%
5. Common input tax paid & claimed for
12 months on 12.5% goods : Rs. 30,000-A for 12.5%
Sl. Description 4% rate of goods 12.5% rate goods
No.
1. Apply calculation A x B/C A x B/C
4,800 x 50,00,000 30,000 x 50,00,000
60,00,000 60,00,000
2. Eligible input tax credit 4,000 25,000
3. Input tax credit claimed
in returns 4,800 30,000
4. Balance payable 800 5,000
5. Adjustment Pay this amount by Pay this amount by
including 4% output including 12.5% output
box in Form VAT 200 box in Form VAT 200
for March for March
3. VAT dealer following sub-rule( 5) of Rule 20:
(Taxable goods & sales of exempt goods lesser values – Manufacturers or Resellers)
AMD, a rice miller, registered for VAT is engaged in converting Paddy into rice and selling the same along with other byeproducts. AMD is not having any consignment sales or branch transfers. For a tax period, AMD can claim input tax credit as under:
PURCHASES ( INPUT) SALES ( OUTPUT)
RATE OF TAX TURNOVER VAT PAID TURNOVER VAT PAYABLE
4% Goods 1,00,000 4,000 1,50,000 6,000
(Paddy from (Rice, broken
other traders & rice, bran)
gunnies)
12.5% Goods 10,000 1,250 NIL NIL
(Machinery items)
Exempt goods
(Paddy husk) NIL NIL 1,000 NIL
TOTAL TOTAL
INPUT TAX 5,250 OUTPUT TAX 6,000
VAT payable = Output tax – Input tax
= Rs.6,000 – Rs.5,250
= Rs.750
Since the value of taxable goods is more than 95% of the total sale value, AMD can claim full amount of input tax credit. However, if the value of taxable sales is less than 5% of the total sale value, the VAT dealer should not claim input tax credit for that tax period.
Further, AMD is required to make an adjustment of input tax credit for each tax rate in the month of March for the 12 month period ending March on Form VAT 200B.
At the end of March, the turnovers relating to last 12 months are illustrated below: (Adjustments to be made on Form VAT 200B)
1. Total taxable turnover for 12 months : Rs.80,00,000 - B
2. Total sales of exempt goods for 12 “ : Rs. 50,000
3. Total turnover for 12 months : Rs.80,50,000 -C
4. Input tax paid & claimed for
12 months on 4% rate goods : Rs. 48,000 -A for 4%
5. Input tax paid & claimed for
12 months on 12.5% rate goods : Rs. 15,000 -A for 12.5% goods
Sl. Description 4% rate of goods 12.5% rate goods
No.
1. Apply calculation A x B/C A x B/C
48,000 x 80,00,000 15,000 x 80,00,000
80,50,000 80,50,000
2. Eligible input tax credit 47,700 14,907
3. Input tax credit claimed in returns 48,000 15,000
4. Balance payable 300 93
5. Adjustment Pay this amount by Pay this amount by
including 4% output including 12.5%
box in Form VAT 200 output box in Form
for March VAT 200 for March
4. VAT dealer following sub-rule( 6) of Rule 20:
(Specific inputs to specific outputs)
USL, a VAT dealer is engaged in manufacturing of various products. The dealer is manufacturing two separate products (product x and product y) wherein the dealer always makes taxable sales of product x and the product y is meant for both taxable sales and stock transfers. The dealer maintains separate records indicating specific inputs required for specific outputs. For a tax period, the method and procedure for arriving eligible input tax credit is illustrated below:
PURCHASES ( INPUT) SALES ( OUTPUT)
RATE OF TAX TURNOVER VAT PAID TURNOVER VAT PAYABLE
4% Goods for 2,00,000 8,000 1,50,000 6,000
taxable goods (Product ‘x’)
4% goods common 4,00,000 16,000 3,00,000 12,000
for taxable sales & (Product ’x’
exempt transactions and ‘y’)
12.5% goods specific 32,000 4,000 NIL NIL
to taxable sales
12.5% goods common 40,000 5,000 NIL NIL
for taxable sales and
exempt transactions
Exempt transactions NIL NIL 1,50,000 NIL
(Product ‘y’)
TOTAL TOTAL
INPUT TAX 33,000 OUTPUT TAX 18,000
USL is using specific inputs for specific taxable sales and certain common inputs meant for both taxable sales and exempt transactions. Hence, USL is eligible to claim full input tax credit for VAT paid on specific inputs for each tax period and for the VAT paid on common inputs, the eligible input tax credit should be arrived for each tax period by applying calculation A x B/C where ;
A = Common input tax for the tax period for each tax rate
B = Taxable turnover
C = Total turnover
(Including value of exempt transactions)
Sl. Description 4% rate Description 12.5% rate
No
1 Common input 16,000 Common input 5,000
tax paid in the tax paid in the tax
tax period period
2 Apply calculation 16,000 x 4,50,000 8.5% portion 3,400
6,00,000 (tax x 8.5/12.5
3 Eligible input tax 12,000 4% portion 1,600
(tax 4.5%/12.5%)
Eligible input tax 1,600 x 4,50,000
in 4% portion out 6,00,000
of 12.5% rate paid. = Rs.1,200
Eligible input tax 3,400 + 1200
credit for 12.5% = 4600
rate related to
common inputs
Eligible input tax credit for
Specific inputs : Rs.8,000 (4%) + Rs.4,000 (12.5%)
: Rs.12,000/-
Total eligible input tax credit for
the tax period : Rs.12,000 + Rs.16,600
: Rs.28,600
VAT payable /Credit carried over : Output tax – Input tax
: Rs.18,000 – Rs.28,600
: (+) 10,600 credit carried over to next period
NOTE: I) USL should submit Form VAT 200 A every month, making adjustment of input tax credit to arrive and claim eligible input tax credit for that tax period for each rate.
2) Further, USL should also carry out adjustment of input tax credit for each tax rate for a period of 12 months ending March and submit such details in Form VAT 200B.
3) Such adjustment shall be made as below:
a) any excess claimed in the monthly VAT returns shall be paid back in the return for March by adding it to the appropriate box in the output column for each tax rate.
b) any balance credit eligible in the monthly returns shall be claimed is the return for March by adding it to the appropriate box in the input column for each tax rate.
5. VAT dealer following sub-rule (7 ) of Rule 20:
(Manufacturing & selling taxable goods and exempt goods)
KHT, a dairy plant is registered for VAT and engaged in production and sales of both taxable goods and exempt goods. The procedure for claiming input tax credit for a month is shown below:
PURCHASES ( INPUT) SALES ( OUTPUT)
RATE OF TAX TURNOVER VAT PAID TURNOVER VAT PAYABLE
4% rate goods 2,00,000 8,000 1,00,000 4,000
common for
taxable and
exempted goods
12.5% rate 60,000 7,500 NIL NIL
common for
both taxable
and exempt
goods
Exempt goods 5,00,000 NIL 7,00,000 NIL
TOTAL TOTAL
INPUT TAX 15,500 OUTPUT TAX 4,000
VAT payable = Output tax – Input tax (eligible)
To arrive eligible input tax credit, the VAT dealer should make calculation A x B/C in Form VAT 200A for the tax period for each tax rate.
A = Input tax paid for each tax rate
B = Taxable turnover
C = Total turnover (Taxable turnover + turnover of sales of exempt goods)
Sl. Description 4% rate of goods 12.5% rate goods Total eligible
No.
1. Input tax 8000 7500 NIL
paid in the
tax period
2. Apply 8,000 x1,00,000 7,500 x 1,00,000 NIL
calculation 8,00,000 8,00,000
3. Eligible input
tax 1000 938 1938
VAT payable in the tax period : Rs.4,000 – Rs.1,938
: Rs.2,062
NOTE: 1) KHT should submit Form VAT 200A every month, making adjustment of input tax credit to arrive and claim eligible input tax credit for that tax period.
2) Further, KHT should also carry out adjustment of input tax credit for each tax rate for a period of twelve months ending March and submit such details in Form VAT 200B
3) Such adjustment shall be made as below:
a) any excess claimed in the monthly VAT returns shall be paid back in the return for March by adding it to the appropriate box in the output column for each tax rate.
b) any balance credit eligible in the monthly returns shall be claimed is the return for March by adding it to the appropriate box in the input column for each tax rate.
6. VAT dealer following sub-rule(8) of Rule 20:
(Taxable goods & exempt transactions of taxable goods)
SKM, a VAT dealer is engaged in manufacture and sale of Cement. The dealer also despatches the goods on consignment basis to other States. There are no sales of exempt goods. For a tax period, the purchases and sales effected by the dealer are illustrated below indicating method and procedure to claim input tax credit.
PURCHASES ( INPUT) SALES ( OUTPUT)
RATE OF TAX TURNOVER VAT PAID TURNOVER VAT PAYABLE
4% goods 60,00,000 2,40,000 NIL NIL
12.5% goods 50,00,000 6,25,000 5,00,00,000 62,50,000
Exempt
transactions NIL NIL 50,00,000 NIL
TOTAL TOTAL
INPUT TAX 8,65,000 OUTPUT TAX 62,50,000
Since the VAT dealer is using the inputs common for both taxable sales and exempt transactions, SKM should arrive at eligible input tax credit for each tax rate for the tax period to claim in the monthly return. For this purpose, SKM should calculate eligible input tax credit in Form VAT 200A for the tax period by applying A x B/C, where ;
A = Input tax paid for each tax rate.
B = Taxable turnover
C = Total turnover
(Taxable turnover + value of exempt transactions)
Sl. Description 4% rate Description 12.5% rate
No
1 Input tax paid Input tax paid in 6,25,000
in the tax period 2,40,000 the tax period
2 Apply calculation 2,40,000 x 5,00,00,000 8.5% portion 4,25,000(*)
5,50,00,000 (tax x 8.5/12.5
3 Eligible input tax 2,18,182 4% portion (tax 2,00,000
4.5%/12.5%) 2,00,000 x 5,00,00,000
Apply calculation 5,50,00,000
for 4% portion = Rs.1,81,818
Eligible input tax
in 12.5% rate 4,25,000 + 1,81,818
= 6,06,818
(*) Input tax to the extent of 8.5% portion can be fully claimed in the same tax period.
Sl. Description 4% rate Description 12.5% rate
No
1 Input tax paid Input tax paid in 6,25,000
in the tax period 2,40,000 the tax period
2 Apply calculation 2,40,000 x 5,00,00,000 8.5% portion 4,25,000(*)
5,50,00,000 (tax x 8.5/12.5
3 Eligible input tax 2,18,182 4% portion (tax 2,00,000
4.5%/12.5%) 2,00,000 x 5,00,00,000
Apply calculation 5,50,00,000
for 4% portion = Rs.1,81,818
Eligible input tax
in 12.5% rate 4,25,000 + 1,81,818
= 6,06,818
(*) Input tax to the extent of 8.5% portion can be fully claimed in the same tax period.
7. VAT dealer following sub-rule( 9) of Rule 20:
(Taxable sales, sales of exempt goods and exempt transactions of taxable goods)
IAK, a VAT dealer is engaged in manufacture of Cotton yarn and cloth. The dealer effects stock transfer of cotton yarn to other states besides making sales of Cotton yarn and exempt goods i.e., Cloth. The method and procedure to arrive at and claim eligible input tax for a tax period is illustrated below:
PURCHASES ( INPUT) SALES ( OUTPUT)
RATE OF TAX TURNOVER VAT PAID TURNOVER VAT PAYABLE
4% Goods 1,00,00,000 4,00,000 1,00,00,000 4,00,000
12.5% Goods 8,00,000 1,00,000 NIL NIL
Exempt goods NIL NIL 50,00,000 NIL
Exempt
transactions NIL NIL 50,00,000 NIL
(Stock transfers
of cotton yarn)
TOTAL TOTAL
INPUT TAX 5,00,000 OUTPUT TAX 4,00,000
IAK is using common inputs for sales of taxable goods, sales of exempt goods and for the values of exempt transactions. IAK should arrive at eligible input tax credit for each tax rate for the tax period in Form 200A by applying A x B/C calculation, where;
A = Input tax paid for each tax rate
B = Taxable turnover
C = Total turnover (Taxable turnover + Sales of exempt
Goods + value of exempt transactions)
Sl. Description 4% rate Description 12.5% rate
No
1 Input tax paid in Input tax paid in 1,00,000
the tax period 4,00,000 the tax period
2 Apply calculation 4,00,000 x 1,00,00,000 8.5% portion 68,000
2,00,00,000 (tax x 8.5/12.5
3 Eligible input tax 2,00,000 4% portion 32,000
(tax 4.5%/12.5%)
Eligible input tax 32,000 x 1,00,00,000
in 4% portion out 2,00,00,000
of 12.5% rate = Rs.16,000
paid – arrive by
applying calculation
Eligible input tax 68,000 + 16,000
in 12.5% rate goods = 84,000
Total eligible input tax credit
for the tax period : 2,00,000 + 84,000
: Rs.2,84,000
VAT payable for the tax period :Output tax – Input tax (eligible)
: 4,00,000 – 2,84,000
: Rs.1,16,000
NOTE: 1) IAK should submit Form VAT 200A every month, making adjustment of input tax credit to arrive at and claim eligible input tax credit for that tax period for each rate.
2) Further, IAK should also carry out adjustment of input tax credit for each tax rate for a period of 12 months ending March and submit such details in Form VAT 200B.
3) Such adjustment shall be made as below:
a) any excess claimed in the monthly VAT returns shall be paid back in the return for March by adding it to the appropriate box in the output column for each tax rate.
b)any balance credit eligible in the monthly returns shall be claimed is the return for March by adding it to the appropriate box in the input column for each tax rate.
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