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Tax treatment
If a company purchases goods @ 4 % vat and transfer such goods to its branch at some other state(branch transer) against form'F' and branch further sells the goods..In this case what shall be the tax scenario as it is in the case of reversal & how the credit of tax will be utilized??
Replies (6)
ITC will be available for the purchase amt @ 2% (4%- 2%).
I m not getting the explanation given by you. Will u elaborate the concept & explain to me??
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Input tax credit of VAT on stock transfer can be availed after retention of 2%.... Hence even though the tax is paid @ 4% ITC can be availed only @ 2% (i.e. 4% - 2% retention).... Hope this helps.....
Thanks for the explanation..But y after the retention of 2%??. Because on stock transfer at branch, no tax liability arises..
Input tax credit in such cases(branch transfer ,stock transfer to any other state) will available in excess of 2% of tax paid on such purchase,.
Because on inter sate purchase CST paid (which is 2%) is not eligible for ITC.
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