VAT queries
This query is : Resolved
31 August 2009
Hi, I had a querry regarding certain aspects of VAT for Rajasthan.
1. Can we claim input tax credit if the purchases are made from an unregistered dealer in case of leasing and hire-purchase transactions.
Is there any other state where ITC can be claimed if purchases are made from unregistered dealer
2.Is there any composition scheme applicable for Hire purchase transactions for years prior to introduction of VAT.
3.Are we required to pay VAT on re-possessed assets sold in cases default by the customer.
1. Can we claim input tax credit if the purchases are made from an unregistered dealer in case of leasing and hire-purchase transactions.
Is there any other state where ITC can be claimed if purchases are made from unregistered dealer
2.Is there any composition scheme applicable for Hire purchase transactions for years prior to introduction of VAT.
3.Are we required to pay VAT on re-possessed assets sold in cases default by the customer.
31 August 2009
1. NO, qustion of input VAT never arrisen if purchase made from un-registered supplier because an un-registered supplier never charged VAT.
2. No,
3. Yes.
2. No,
3. Yes.
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31 August 2009
For point no #1 that means that if i purchase from an unregistered dealer i will have to pay tax at the time of purchase @ 12.5% and again on installments @ 12.5 %.
31 August 2009
If you purchase from unregistered dealer, then you are not required to pay any VAT on such URD purchase.
31 August 2009
Thanks Chandraprakash is there any other state in which vat is not required to be paid if purchased from an unregistered dealer..
31 August 2009
.
02 September 2009
Hi Chandraprakash plz help me know in which other states vat is not required to be paid on unregistered purchases
03 August 2025
Let's break down your VAT queries related to Rajasthan and other states (as of 2009):
1. Input Tax Credit (ITC) on Purchases from Unregistered Dealers (Rajasthan and other states)
Rajasthan (2009):
ITC is not allowed if purchases are made from an unregistered dealer. You can claim ITC only if the purchase is from a registered dealer who charges VAT and provides a valid tax invoice.
Hire-purchase and Leasing Transactions:
Same rule applies. If you buy goods from an unregistered dealer, you cannot claim ITC. You effectively pay VAT twice — once at purchase (with no ITC) and again on sales/installments.
Other States:
Most states do not allow ITC for purchases from unregistered dealers. However, some states had specific provisions or exceptions:
Maharashtra: Generally disallows ITC on unregistered purchases.
Karnataka: Similar position.
Tamil Nadu & Gujarat: ITC only allowed for registered dealers.
So, in general across India, ITC on unregistered purchases is disallowed.
2. Composition Scheme for Hire Purchase Transactions (Prior to VAT)
Before introduction of VAT (i.e., under Sales Tax regime), composition schemes for hire purchase were rare or non-existent.
With VAT, some states offered composition schemes on works contracts or goods dealers, but hire-purchase specific composition was uncommon.
Rajasthan did not have a specific composition scheme for hire-purchase transactions prior to VAT.
3. VAT on Sale of Repossessed Assets (Rajasthan)
When you sell repossessed assets (goods taken back due to customer default), VAT is generally applicable on the sale price.
The transaction is treated as a sale of goods, and VAT must be charged at the applicable rate.
However, input tax credit adjustments may be required if the original sale was accounted for differently.
Summary Table:
Query Rajasthan Position (2009) Other States Position (General)
ITC on purchase from unregistered dealer Not allowed Generally not allowed
Composition scheme on hire-purchase Not applicable Rare or no specific schemes
VAT on sale of repossessed assets VAT applicable on sale price VAT applicable
Additional note:
Always check state-specific VAT notifications or circulars for exceptions.
Post-GST, many such issues have been subsumed under the uniform GST regime.
1. Input Tax Credit (ITC) on Purchases from Unregistered Dealers (Rajasthan and other states)
Rajasthan (2009):
ITC is not allowed if purchases are made from an unregistered dealer. You can claim ITC only if the purchase is from a registered dealer who charges VAT and provides a valid tax invoice.
Hire-purchase and Leasing Transactions:
Same rule applies. If you buy goods from an unregistered dealer, you cannot claim ITC. You effectively pay VAT twice — once at purchase (with no ITC) and again on sales/installments.
Other States:
Most states do not allow ITC for purchases from unregistered dealers. However, some states had specific provisions or exceptions:
Maharashtra: Generally disallows ITC on unregistered purchases.
Karnataka: Similar position.
Tamil Nadu & Gujarat: ITC only allowed for registered dealers.
So, in general across India, ITC on unregistered purchases is disallowed.
2. Composition Scheme for Hire Purchase Transactions (Prior to VAT)
Before introduction of VAT (i.e., under Sales Tax regime), composition schemes for hire purchase were rare or non-existent.
With VAT, some states offered composition schemes on works contracts or goods dealers, but hire-purchase specific composition was uncommon.
Rajasthan did not have a specific composition scheme for hire-purchase transactions prior to VAT.
3. VAT on Sale of Repossessed Assets (Rajasthan)
When you sell repossessed assets (goods taken back due to customer default), VAT is generally applicable on the sale price.
The transaction is treated as a sale of goods, and VAT must be charged at the applicable rate.
However, input tax credit adjustments may be required if the original sale was accounted for differently.
Summary Table:
Query Rajasthan Position (2009) Other States Position (General)
ITC on purchase from unregistered dealer Not allowed Generally not allowed
Composition scheme on hire-purchase Not applicable Rare or no specific schemes
VAT on sale of repossessed assets VAT applicable on sale price VAT applicable
Additional note:
Always check state-specific VAT notifications or circulars for exceptions.
Post-GST, many such issues have been subsumed under the uniform GST regime.
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