vat credit

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siva (Querist)
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09 February 2009 in reguler procedure purchase bills accounted in the month of goods recevied.
in case of march bills booked in march month expenditure but in march vat return not mentioned that purches and vat and that vat mentioned in april vat return.
that procedure is correct or not?
please tell me the correct procedure with relevent section ?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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09 February 2009 1) Book the purchases in march.
2) Show the purchase in march vat return.
3) Take input tax credit in march itself.

siva

siva (Querist)
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10 February 2009 in case that purchase bill shown in march exp and vat shown in april return.
what are the concequences? explain with section?

siva

siva (Querist)
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10 February 2009 in case that purchase bill shown in march exp and vat shown in april return.
what are the concequences? explain with section?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2025 Hey! Your question is about the correct timing for accounting purchase bills and claiming VAT credit, and the consequences if the VAT credit is claimed in a later month than the purchase.

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### The correct procedure:

1. **Record purchase and VAT in the same month**:
As per normal accounting and VAT rules, the purchase invoice should be recorded in the month goods/services are received (March, in your case).

2. **Declare purchase and VAT in the VAT return for the same month**:
Input tax credit (ITC) on purchases should be claimed in the same month’s VAT return (March).

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### What if purchase is recorded in March but VAT credit is claimed in April?

* This means your **purchase expenses and VAT credit are mismatched between two months**.
* Legally, ITC can be claimed only in the month when the purchase invoice is accounted for or goods are received.

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### Consequences of mismatch:

* The tax authorities may **disallow the input tax credit claimed late** (i.e., in April instead of March).
* You may face **interest and penalty for delayed credit claim** or incorrect returns.
* It may trigger a **VAT audit or assessment query**.

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### Relevant legal provisions (general guidance):

* **VAT Act (varies by state, but generally):**
Input tax credit is allowed **only if the purchase invoice is accounted for and VAT return filed for that period**.

* For example, in many VAT laws:

* **Section 5(1)**: Input tax credit is allowed in the return for the month in which goods are purchased or received.
* Late claim of credit beyond prescribed period (usually the return filing due date) is generally **not allowed**.

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### Summary:

| Scenario | Correct Procedure | Possible Consequences of Wrong Procedure |
| -------------------------------------- | ----------------------------------- | ------------------------------------------------ |
| Purchase & VAT recorded in March | Claim VAT credit in March return | No issues |
| Purchase in March, VAT credit in April | VAT credit claim delayed by 1 month | VAT credit may be disallowed, interest & penalty |

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### Suggestion:

* Always **match purchase accounting and VAT credit claim in the same period**.
* If a mistake occurs, correct it in the next return with proper explanation (if allowed by the state law).

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If you want, I can help find the exact section from your specific state VAT Act or draft a letter explaining this to the tax authorities.

Would that be useful?

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