tax consultant
154 Points
Joined December 2008
1. Which State ? thats very important. Every state have its own rules for Input tax Credit(VAT Modvat)
2. Under VAT regime there is now no such concept like mfg/reseller etc. Generally speaking you are entitled for all vat paid on purchases booked under Trading Account plus all vat paid on expenses which contain purchase element e.g. printing, stationary. repsird to plant snd mschinesry, electricity, furniture, even VAT paid on hotel bills. PLUS VAT paid on purchases of Fixed Assets.
3. generally rules provide for Negative list which means the items mantioned therein will not be entitled for setoff. There are also rules which restricts vat setoff in certain circumtances and on certain goods.
subject to above do remember that VAT Input Tax credit is much liberal than previous sales tax laws.
thats all for the pen at present