Our clint is purchasing goods locally and selling interstate. He is paying 5% input VAT and selling against CST i.e 2%. Because of this huge VAT accumulated.i.e in Lakhs.
Now my question is, is there any tax planning to set right that apart from following.
1. He can purchase interstate and sell locally
2. He can purchase locally and sell locally.
I requerst experts to give me suggestions other than mentiones above.
Thanks in advance.
I feel it strange to change the business modalities in order take care of credit issue.. Such change will result in other issues viz., availability of materials, logistics cost and administrative inconvenience. Even if such issues can be handled, it is better to seek refund of excess input tax from the department rather than changing the operations...
When businesses are done keeping in mind the issues involving seeking refund etc., following can be looked into;
1. Make Imports and sell domestically..
2. Purchase locally against Form-H and Export the same.
3. Deal in goods which are exempt from VAT.
4. Deal in only those goods on which local rate is less than 2%
this is not much of a problem. you can adjust the CST liability against the VAT paid by you. and if input VAT still remains unutilised, it is refunded after 2 years.
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