Vat on goods sold to unit of armed forces

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 October 2014 Dear Experts,

I wish to know the taxability of Maharashtra VAT/CST on goods sold to any unit of the Indian Armed Forces. Delivery will be outside Maharashtra hence CST would be applicable. However not sure if any exemption is available to such sales. Further, the related purchases will also be exempted from tax?

Querist : Anonymous

Querist : Anonymous (Querist)

10 October 2014 Awaiting assistance experts

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Regarding **VAT/CST on sales to Indian Armed Forces units** (in Maharashtra context):

1. **Sales Tax (VAT/CST) on goods sold to Armed Forces:**

* If delivery is **outside Maharashtra**, **CST (Central Sales Tax)** is applicable, not VAT.
* Sales to the Indian Armed Forces are generally **exempt from both VAT and CST** under various exemptions granted by the Government of India and the respective state acts.
* In Maharashtra, under the **Maharashtra VAT Act**, sale to the Indian Armed Forces may be exempt under the relevant notification or schedule for government or defense supplies.
* To claim exemption, the dealer should obtain a **declaration form** or **exemption certificate** issued by the Armed Forces.

2. **Purchase Tax/Input Credit:**

* For purchases related to exempt sales (i.e., supplies to Armed Forces), **input VAT credit is generally not available** on purchases directly attributable to such exempt sales.
* However, if the dealer has mixed sales (taxable and exempt), they need to maintain proper records and follow the input tax apportionment rules.

3. **Key Points:**

* Verify the exact notification under which exemption is granted in Maharashtra.
* Ensure proper documentation: Form C for CST (if applicable), and exemption certificates.
* Consult the Maharashtra Commercial Tax Department circulars or consult a tax advisor for the latest updates.

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**Summary:**

* **Sales to Armed Forces delivered outside Maharashtra = CST applicable but generally exempt** under Government notifications.
* **Input VAT credit on related purchases may not be allowed fully if sales are exempt.**

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If you want, I can help find the specific Maharashtra VAT notification or circular related to this exemption. Would you like that?

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