Input tax - karnataka vat - VAT

MJ Krishnamurthy (ACCT(Retd)) (7197 Points)
Replied 08 January 2012

Mr. Prakash TC,

From WB when you send some goods on stock transfer against form'F' to your branches in other states,including Karnataka, you have to reverse the input tax credit claimed already or reduce so much out of the input tax credit that you are going to claim. You have to reverse the tax paid above the 3% while purchasing the goods in WB as per Sec 22A (sub secs 7,8,9 and 10 )of WB VAT Act,2005.

Suppose you have purchased one qtl of some goods for Rs6000/- and paid VAT @ 12.5% i.e.Rs750/- and you tarnsferred it to other state branch, then you can claim ITC of Rs180/-only and the balance of Rs570/- can not not be claimed. In this case suppose you have purchased these goods much earlier and already claimed Rs 750/- as ITC and now the same item is sent on stock transfer then you have reverse Rs570/- of ITC in this month return

There is problem of reversing the ITC in the case of goods sold in interstate sale whether to registered or unregistered dealers.

In Karnataka as per sub sec 5&6 of Sec 11 and Sec14 ITC of 4% is allowed and above that is disallowed and if already claimed ,to be reversed.

MJK

RAJU (LEARNER) (1089 Points)
Replied 09 January 2012

As far as Karnataka is considered, with due respect to Krishnamurthy sir, I have a different view..

As per Section 14 read with 11(5) & (6) of KVAT Act, input tax will be ineligible to the extent of 4% and over & above 4% will be eligible and not vice versa.

It is also to be noted that 4% is no more in force as the Government has notified CST rate which is 2% as the rate applicable with respect to above provisions.

Hence, input tax upto 2% will be ineligible in case of goods transferred outside the State not as a result of sale.

MJ Krishnamurthy (ACCT(Retd)) (7197 Points)
Replied 09 January 2012

Mr Dharmaraju,

I agree with you . I have somewhat mixed up the matter while clarifying the ITC reversal issue.The Government want at least 4% tax on the goods sent on stocktransfer. So the ITC claimed above 4% has to be reversed in the case of goods despatched out side the state otherwise than by way of sale.

Now,coming to the point of 2% only instead of 4% ,in view of reduction in CST against 'C' form to 2% we can not take it for granted here due to CST Act amendment. The Karnataka govt has to seperately notify that in this case ITC reversal of tax paid above 2% is to be done. So far, I have not read any notification on this matter. So, let this be benificial to the dealers.

This provision exists in many other Acts also. The clarification given with respect to WB Act is correct While refering the same matter out of KVAT Act there has occured a self contradicting statement. Thank you for correcting it.

MJK

RAJU (LEARNER) (1089 Points)
Replied 09 January 2012

Hello Sir,

The Karnataka Government has already notified the rate. Please check notification No.FD 507 CSL 2007 (IX), Bangalore, dated 1st April 2008.

The reduction of rate is beneficial to the dealer has the input tax to be foregone will be 2% as against 4%/3%.

MJ Krishnamurthy (ACCT(Retd)) (7197 Points)
Replied 09 January 2012

Mr Dharmaraju,

That notification refered by you specifies reduction rate to 3% only. If you know any other notification which reduces the input to be foregone to 2% please inform me.

MJK

RAJU (LEARNER) (1089 Points)
Replied 09 January 2012

The notification says that it is 3% or such lower rate as may be notified by the Central Government under proviso to sub-section (1) of Section 8 of the CST Act w.e.f. 1-4-2008.

Vide notification No.1/2008-CST-F No.28/11/2007-ST, dated 30-5-2008, the Central Government has notified 2% as the rate U/s.8(1).

By default, the effect would be 2% for Interstate sale against Form-C as well as the rate for computation of ineligible input tax.

Trust it is in order.

MJ Krishnamurthy (ACCT(Retd)) (7197 Points)
Replied 09 January 2012

Yes, You are right.

RENGARAJ R.K (ADVOCATE) (7557 Points)
Replied 10 January 2012

I agree with Mr Dharmaraju. The reversal of ITC is to be made not only to stock transfer i.e other than by way of sale, but also interstate sale without C form. This point is also to be considered.

rengaraj r.k

RAJU (LEARNER) (1089 Points)
Replied 10 January 2012

Input tax is eligible even for Interstate sales. There will be no reversal fo ITC on Sale either with Form-C or without Form-C. These transactions will not form part of non-taxable transactions.

BHARATH SRIVATSAN (EMPLOYEE) (43 Points)
Replied 06 March 2012

Hi All,

Thanks for all the positions. All the places section 14 is referred, but Sec 17 of KVAT also specifies about partial rebating. So kindly give me an insite on this issue.

Regards

Bharath

Prakash T c (Executive) (194 Points)
Replied 11 March 2012

Dear Mr. Krishnamoorthy,

Thank you so much for ellabrate explaination.

Pl take a example as below, how to calculate the Ineligible workings

Local sales within state 213000

cst sales 2300000

stock transfer sales other state 5600000

stock transfer sales within state 250000

The stock transfer sales within state shall not be taken in total turnover... hence the total turn over is 8113000/-

Lohith H P (Student) (45 Points)
Replied 22 September 2014

Dear All,

I have one doubt, plz anyone clarify.

Material Purchased in with in the satet and that matrial sales to other state (CST Sales) without Form C, Now Can i avail the Input tax credit on the purchase or any restrication for avail the input credit..?

Thanks & Regards

Lohith H P

Raghavendra c shet (CA) (21 Points)
Replied 15 October 2014

suppose if i purchase the goods worth Rs 10000/- @ 14.5% vat amounted to Rs 1450/- and after adding some value addition, i transfered to Branch (against F -Form) Rs 50000/-, in that case how much will be the ITC is allowed. is it Rs 1250/- or Rs 450/-

1) Rs 1250/-

i.e on purchase value Rs 10000/- @ 12.5% eligible amount Rs 1250/-

2) Rs 450/-

i.e on stock transfer value Rs 50000/- @ 2% ineligible Rs 1000/- minus to that input tax credit Rs 1450/- , then remaining will be Rs 450/- eligible.

please clarify the matter.