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Vat refund to Cloth Manufacturer

Sunil Dhiwa (Freelance for Tally & Accounts) (103 Points)

18 October 2009

Dear Members

I want to know is there in refund can get by a Cloth Manufactured

In his Input Vat .

As on cloth there is no Out Tax

But the Raw MAterial is used by them is Taxable like thread, yarn, colour, chemicals etc. with Vat

Is there way that they can get VAT Refudn for that.

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1 Replies

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 20 October 2009

There is a rule / provision in the VAT Act and Rules that a dealer shall not get the set-off or refund of the input vat if at all there is no output vat. So, prima-facie, there can be no set-off or refund for the input vat so paid on purchases.

However, if at all there is any sale other that the main product, say any fixed asset, then the input vat can be set-off against the asset sale and the difference can be claimed as refund.

Regards,

CA Amol G. Kabra