Idt mohd rafi book's vat ques

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CA Vijeta Verma (Querist)

28 August 2012 if anyone having mohd Rafi's latest addition then can he/she explain the solution of VAT EX-4 & 5.given on page 598 & 599.
Basically problem I am facing is the proportionate allowance of ITC of 16000 & 5000.
I am posting the question in general--
Mr sony a VAT dealer is engaged in the manufacture of various products.the dealer is manufacturing two separate product X & Y wherein the dealer makes taxable sales of product X & product Y is meant for both taxable sales as well as stock transfer.

purchases(VAT excluded in all cases)
1.4% goods of Rs 200000,VAT RS8000,being used for taxble sales
2.4% goods common for taxable & exempted goods Rs 400000,VAT Rs 16000
3. 12.5% goods specific to taxable sales Rs32000,VAT Rs 4000
4.12.5% goods common for taxable & exempted sales Rs 40000 & VAT Rs 5000

sales (VAT exluded)
1.4% goods value 150000,VAT 6000 used in product x only
2. 4 % goods value 300000 VAT 12000 used in sale of product X & Y
3. exempted other transaction value 150000,VAT NIL used in stock transfer to state.

ANSWER AS given - 12800 ITC to be carried forward next month.kindly explain the proportionate ITC allowance
Regards

MJ Krishnamurthy

MJ Krishnamurthy (Expert)

29 August 2012 Miss Sandhya,
As I understand the input tax os Rs33.000/-available(taking that all the purchases have been consumed in production shown in sales only),has to be proportionately distributed to the sales and stock transfers. The total sales RsRs 6,00,000/-and the ITC of Rs8250/-(1/4 th)is to be disallowed. Hence 33000-8250=24750 is allowed. Output os Rs18000 is reduced and only Rs 6750/- is be c/f for the next period. Pl check up....MJK

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