Input tax credit - sales tax assessment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 July 2013 Cross confirmation is asked to submit by Department during Assessment which we collect for 90% suppliers and 10% not possible due to various reasons. Are we eligible for credit to the extend confirmation certificate submitted to Sales tax department or 100%.

Querist : Anonymous

Querist : Anonymous (Querist)

09 July 2013 At what rate tds is deductible under sec 194I for Car lease rental. 2% or 10%.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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01 August 2024 ### Input Tax Credit - Sales Tax Assessment

**1. Eligibility for Input Tax Credit:**

- **Confirmation Certificates:**
- **General Rule:** For sales tax assessments, the input tax credit (ITC) is generally available based on the valid documentation, such as tax invoices, and not necessarily contingent on cross-confirmation certificates. If you have collected confirmation certificates for 90% of your suppliers, you should be eligible for ITC on the entire amount of eligible purchases as long as you have valid invoices and other necessary documentation for all purchases.
- **Non-Confirmation for 10% Suppliers:** The absence of cross-confirmation certificates for 10% of your suppliers typically should not disqualify you from claiming ITC on those purchases if you have proper documentation, such as valid tax invoices. However, you might need to justify the lack of confirmation certificates and provide other evidence to support your claim.

- **Practical Considerations:**
- Ensure that your ITC claim is supported by valid documentation and evidence that the purchases were for business purposes. The department might disallow credits if the documentation is not satisfactory, even if cross-confirmation certificates are not obtained.

**2. TDS Deduction under Section 194-I for Car Lease Rental:**

- **TDS Rate for Car Lease Rental:**
- Under **Section 194-I** of the Income Tax Act, 1961, TDS on rent payments, including lease rentals for cars, is generally **10%** for individuals and Hindu Undivided Families (HUF) and **2%** for others (companies, partnership firms, etc.).

- **Details:**
- **Section 194-I**: TDS is applicable on rent payments for land, building, machinery, plant, or equipment.
- **Rate:** The rate of TDS for rent, including car lease rentals, is **10%** if the recipient is an individual or HUF, and **2%** if the recipient is a company or other types of organizations.

**Summary:**

- For input tax credit, you are generally eligible for credit on the total amount with proper documentation, even if some confirmations are not received, but it’s prudent to ensure all necessary documentation is in place.
- For TDS on car lease rentals, the deduction rate is **10%** for individuals and HUF, and **2%** for other entities such as companies.

If you face specific issues or require detailed advice, consulting with a tax professional or legal advisor would be beneficial to address the complexities of your situation.

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