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set off of VAT

Rajesh Poddar (Chartered Accountant) (321 Points)

03 October 2008

A client is following the set off as follows :-

Sales Rs. 10,00,000/- Add: WCT at 8 % = 80,000/- total sales invoice Rs. 10,80,000/-

Purchases Rs. 4,00,000 plus 4 % vat = 16000 = 4,16,000/-, Purchases Rs. 2,00,000 plus 12.5 vat = 25000 = 225000/-

he pays vat as RS. ( 80000- 64%(16000+25000)) = 26240/- = 53760/-

Is this system correct, please reply

CA Rajesh Poddar

Hello: 9820989383

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7 Replies

CA V. Mohanakrishnan (Chartered Accountant) (401 Points)
Replied 03 October 2008

this is under which VAT act.

normally where in a works contract there is a composition scheme, the set off is not allowed.

where there is no composite vat rate and it is specifically on each material then the set off is allowed.

clear details required

CA. C V SURYAM (Practising Chartered Accountant) (865 Points)
Replied 04 October 2008

Of course, in one State i.e., Maharashtra, set-off is available with certain restrictions, even the dealer in composition.

Rajesh Poddar (Chartered Accountant) (321 Points)
Replied 04 October 2008

Originally posted by :C V SURYAM
"	Of course, in one State i.e., Maharashtra, set-off is available with certain restrictions, even the dealer in composition.	"

This query pertains to MVAT

Rohit Khare (student) (111 Points)
Replied 07 October 2008

Hi Rajesh,

In case of Works Contract wherein 8% tax is collected on sales, only 16/25 i.e. 64% of total input VAT credit is available. Hence what your client is doing is right. What is the exact nature of services he is providing? Is he doing repairs maintenance job or what??

CA Vivek (CA , CS) (71 Points)
Replied 14 October 2008

Originally posted by :Rajesh Poddar
"	A client is following the set off as follows :- Sales Rs. 10,00,000/- Add: WCT at 8 % = 80,000/- total sales invoice Rs. 10,80,000/- Purchases Rs. 4,00,000 plus 4 % vat = 16000 = 4,16,000/-, Purchases Rs. 2,00,000 plus 12.5 vat = 25000 = 225000/- he pays vat as RS. ( 80000- 64%(16000+25000)) = 26240/- = 53760/- Is this system correct, please reply CA Rajesh Poddar Hello: 9820989383	"

Hi Rajesh

When dealer is opting for composition scheme then his total Input Credit ( setoff) is reduced by 36% your clients is reducing his set off by 36% which is right.

The system followed by your clients is correct.

When dealer is not opting for composition scheme he is eligible for 100% set off

Regards

Vivek

(9833976187)

Kavith Thakkar (Chartered Accountant) (120 Points)
Replied 16 March 2011

Pls solve my following query

1. Can Composition dealer show tax (vat) in his invoice?

2. Can anyone take the set off, on the invoice of dealer (caterer) who is in Composition Scheme?

Pls give the Reference [i.e Rule Number / Section (if any) of the same]

kavith_thakkar @ yahoo.com

nayana (accountant) (22 Points)
Replied 13 December 2012

A client is following the set off as follows :- Sales Rs. 10,00,000/- Add: WCT at 8 % = 80,000/- total sales invoice Rs. 10,80,000/- Purchases Rs. 4,00,000 plus 4 % vat = 16000 = 4,16,000/-, Purchases Rs. 2,00,000 plus 12.5 vat = 25000 = 225000/- he pays vat as RS. ( 80000- 64%(16000+25000)) = 26240/- = 53760/- Is this system correct, please reply CA Rajesh Poddar Hello: 9820989383

Hi,

in the above situation , i need a clarification that how did the client reached to 64%?
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