Regarding tnvat amendment act 28 of 2013

Dear Mr. Dhanasekaran,

You are liable to pay Rs. 78,000/-.  The proportionate input vat available for VAT collection is Rs. 40,000/-. and The remaining portion Rs. 80,000/- is to be in proportion of 2% available on Rs. 80,000/-. i.e Rs. 32,000/-. So total input vat credit available is Rs. 72,000/- Hence you are liable to pay the balance of Rs. 78,000/-. I think that I am correct. Please correct me, if not. 

Dear Dhanasekaran, (as I understood)

Before Amendment: Input tax credit for the goods sold  to a dealer in another state (sale as in Sec.8(1) of CST Act)........can be taken to the full extent.

Ammendment: “provided that input tax credit shall be allowed in excess of three percent of tax for the purpose specified in clause (v)”

Effect: Consider this Example.

I purchased goods in chennai - 5000 + 5% vat = 5250

I sold the same goods to dealer in Mumbai - for some 6000 and charged CST @ 2% (This is normal) - 6000+120 = 6120

Payment: CST to be paid = 120

Less: Vat credit available - 2% on 5000 = 100. Net Payment = 20

That is Input Vat credit can be taken only 2% of 5000 even though you paid 5% on 5000.

(Earlier to this, we can claim 5% on 5000 as ITC).....Post your further qwery if needed.

Dear Mr. Dhanasekaran,

The turnover for the VAT collected of Rs. 50,000/- shall be Rs. 10,00,000/-

The turnover for the CST collected of Rs. 1,00,000/- shall be Rs. Rs. 50,00,000/-

The Proportion of CST sales on the input vat credit of Rs. 1,20,000/- shall be Rs. 1,00,000/- i.e. Rs. 1,20,000/- divided by Rs. 60,00,000/- (Rs. 10 lakhs + Rs. 50 lakhs) multiplied by Rs. 50,00,000/-

On Rs. 1,00,000/-, the portion of 3% should be reversed. I.e. Rs. 1,00,000/- divided by 5 multiplied by 3. equals to Rs. 60,000/-. Hence the amount liable to pay is Rs. 90,000/- (Rs. 1,50,000/- (amount collected)  less Rs. 60,000/- (To be reversed) ) Please ignore my previous reply.

Dear Sir, I need to clarify a doubt regarding ITC reversal under TN Vat.

i.e.M/s. Jaya Traders purchased the goods @ 5%  for Rs.105000 (incl Vat)

         They have Purcahsed some goods @ 14.5% for Rs.114500(incl Vat)

Now they sold the goods @ 2% to other state for Rs.306000(incl CST)

What is their Tax Laibility?

Dear Mr.Jagadeesan

All the best for successful CA.

Reversal  of ITC formula  for 5% ITC = ITC for the month X CST Turnover  / Total Turnover X 3/5

And for 14.5% ITC  = ITC for the month X CST Turnover  / Total Turnover X 3/14.5

So in your case 5% ITC reversal = 5000 X 300000 / 300000 X 3/5 = Rs.3000 and

14.5% Reversal = 14500 X 300000/300000 X 3/14.5 = Rs.3000 so

Total reversal as per new amendment is Rs.6000.

And also you should adjust this amt form your ITC Available i.e Rs. 19500 less Rs.6000

Now available ITC is Rs.13500 and CST due to be adjusted with this amt i.e Rs.13500 less Rs.6000 (300000 @ 2% ) so finally you can carry over your ITC to next month is.Rs.7500. ( So there is no tax Liability)

(  Workings attached in Excel formate )

I think you are clarified. If not feel free to contact me through email.

Rgds

S.Rajasekar

Rajave Textiles

( X – Indoshell Mould Ltd )

( X –Shakthi Knitting Ltd –Tpr)

Mail ID – rajsekarigr @ gmail.com

Dearr Sir

Thank you so much for your reply.It is really helpful me.

Dear Mr. Rajashekar, in the above case. what if the cst sales is very less.

consider the example local purtchases 10,00,000 vat rate 5%. CST sales 200000 @ 2% then as per the formula vat to be reversed is (10,00,000x5%)x2,00,000/2,00,000x3?/5 = 3,00,000. In this case is't the assessee in a loss.as per the formula.

Also if the assessee follows the other method of directly reversing which would be beneficial to him, and next month he is able to make both local and cst sales, then what is d alternative left to him, stick to the old mrthod or opt for the formula method?