Karnataka vat on sale of scrap

This query is : Resolved

Ganapati (Querist)
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03 February 2012 Karnataka VAT:

When a Car is purchased for business purpose, whether it is possible to take input VAT credit, if input VAT paid on such purchase?

If such Car is resold, whether dealer should collect and pay output tax? if yes what is the rate under Karnataka VAT?

while purchasing the car if dealer not taken the credit of input tax, whether he is liable to collect and pay output tax on resale now?

CA. Hari Kishan

CA. Hari Kishan (Expert)
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03 February 2012 Mr.Ganapati

Input tax credit is not allowed on purchase of a motor vehicle as the same is restricted goods under 5th schedule. (For a dealer not in trading of motor vehicle).

However on sale of motor vehicle there shall be VAT payable presently @ 5% under the Karnataka VAT Act, 2003 as the same are goods under KVAT Act, 2003.