Regarding tnvat amendment act 28 of 2013

Dhanasekaran D (Intern at R S & Co Chennai)   (193 Points)

10 December 2013  

Dear All,

On November 8th, 2013, Commercial taxes department made fifth amendment to tnvat act... the amendment file and the latest act copy from the official website is attached for your reference....

Act Link:- https://www.tnvat.gov.in/English/vatact_231206.pdf 

the amendement says that "the input tax credit shall be allowed in excess of three percent of tax for the purpose of sale in the course of inter-State trade or commerce falling under sub-section (1) of
section 8 of the Central Sales Tax Act, 1956.

Now my query is that disallowed 3% is with regared to credit claimed in relationt to cst liability or the whole sales tax liability... 

If a companies vat liability is Rs. 50,000.00 and cst liability is Rs. 1,00,000.00, their ITC available is Rs. 1,20,000.00... they set off vat liability fully and the excess credit is set off against cst liability... 

Output liabilibi 50000 - itc 120000 = excess is 70000 which is set off against is CST liability of 100000 and balance 30000 is paid... now what will be the impact of this amendment ... 

Thank you for your answers...!!