Refund of VAT ITC due to Evaporation loss.
This query is : Resolved
07 February 2025
As per the Gujarat VAT Act, do we need to refund VAT ITC or pay VAT due to excess or more than the admissible limit of evaporation loss on petrol/diesel?
12 August 2025
Key Points:
Evaporation Loss in Petroleum Products
Petrol and diesel are prone to evaporation losses during storage and handling. VAT laws typically allow a certain percentage of permissible loss.
Permissible Evaporation Loss Limit
Under Gujarat VAT (and other state VAT laws), a standard permissible evaporation loss percentage is prescribed for petroleum products (usually around 0.5% to 1%—you need to check the exact figure as per the Gujarat VAT rules).
If Actual Evaporation Loss Exceeds Limit
VAT ITC (Input Tax Credit) claimed on the lost quantity exceeding the permissible limit is required to be reversed/refunded to the tax authorities.
The dealer must pay VAT on the quantity lost in excess of the permissible limit because it is considered a supply/use without payment of tax.
How to Treat ITC and VAT on Excess Loss
The VAT ITC on evaporated quantity beyond permissible limits is not allowed and must be reversed.
VAT on such excess loss quantity is to be paid as tax due.
Documentation and Reporting
Maintain proper records of opening stock, closing stock, sales, purchases, and loss to substantiate the evaporation loss claim.
Evaporation Loss in Petroleum Products
Petrol and diesel are prone to evaporation losses during storage and handling. VAT laws typically allow a certain percentage of permissible loss.
Permissible Evaporation Loss Limit
Under Gujarat VAT (and other state VAT laws), a standard permissible evaporation loss percentage is prescribed for petroleum products (usually around 0.5% to 1%—you need to check the exact figure as per the Gujarat VAT rules).
If Actual Evaporation Loss Exceeds Limit
VAT ITC (Input Tax Credit) claimed on the lost quantity exceeding the permissible limit is required to be reversed/refunded to the tax authorities.
The dealer must pay VAT on the quantity lost in excess of the permissible limit because it is considered a supply/use without payment of tax.
How to Treat ITC and VAT on Excess Loss
The VAT ITC on evaporated quantity beyond permissible limits is not allowed and must be reversed.
VAT on such excess loss quantity is to be paid as tax due.
Documentation and Reporting
Maintain proper records of opening stock, closing stock, sales, purchases, and loss to substantiate the evaporation loss claim.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Fixe term employment
- Is any professional CA is here please reply
- GST ITC REVERSE
- Section 50-fixed asset-->building ceases to exist
- Reprocessing of rectification order AY 2025-26
- Tax Audit u/s 44AB for Transport Business A proprietorship is engaged in transportation business and
- EXPORT BILL UNDER LUT FREIGHT CHARGE INCLUED IN INVOICE IT LIABLE TO TAX
- Putting a heading on received mail
- Foreign lottery ticket bought online from India: legality, tax and consequences
- Gift Received from nonblood relative
- Consolidated financials
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
