Input credit on interstate purchase

Under current VAT Act, not allowed.  Under GST regime, it is permitted, as per the white paper.

rengaraj r.k

Under VAT Act, inpu credit can be availed only on intra-state purchases

Sales Tax revenue is collected and retained by the Govt of state in which seller does business.

In case of CST Sales Tax revenue is collected from seller in one state and the state govt in which purchaser residing would not allow the credit for tax collected by other states.

In case of VAT, seller and purchaser are residing in the same state, so the state govt will collect VAT from seller and allow purchaser to take its credit

What is Input Credit - VAT paid on purchases made locally (Intra-State). This VAT will be finally reach to local state Govt.

What is Interstate purchase- CST paid on purchases made outside the state (Inter-State) This CST will be finallly reach to that State only and not to local state Govt. Hence ITC cannot be availed on Interstate purchases

Not Input VAT Credit is not allowable on Purchase made outside the state. Its covers only Intra-state purchase.

Credit cannnot be availed on Inter-state purchases under VAT rules.

Dear Mr.Ramachandra Reddy,

There no provision neither in Central Sales Tax Act nor in State VAT Act for availing input credit on CST.

Basavaraj