Friday, July 20, 2012

Value Added Tax (VAT) Q&A

Q. Can input tax credit be adjusted against CST payable on inter-state sales?
A. Yes, but after adjusting input tax credit against the output tax payable under the VAT if there is any balance of tax credit, such credit shall be adjusted against the CST payable

Q.Whether input tax credit will be admissible for the purchases made before registration?
A. No. In such cases also, input tax credit will not be admissible.

Q.Whether input tax credit would be available for the purchases made from a dealer paying lump-sum tax?
A.No. In such cases, input tax credit will not be admissible

Q. Whether input tax credit is available for the purchases made from a person who is not a registered dealer?
A.No. However, purchase tax paid on such purchase is admissible as input tax credit.

Q.Whether input tax credit will be available on inter state purchases or imports?
A.No. Input tax credit will not be available on inter state purchases or imports. Only purchases within the State are qualified for input tax credit.

Q.Whether input tax credit will be available for purchases of motor vehicles?
A.No, unless vehicle is purchased for resale.

Q. Whether input tax credit will be available for fuels used in motor vehicles?
A. No. Input tax credit would not be available in such case also.

Q.Whether input tax credit will be available for fuels used in generation of electricity including captive power?
A.
No. Input tax credit will not be available in such case.    

Q.Whether input tax credit will be admissible for capital goods also?
A.Yes. Input tax credit will be admissible for capital goods used in the manufacture of taxable goods. Capital goods must be used continuously for a full period of five years within the State. How ever, no input tax credit would be admissible for capital goods purchased for the use in:
1. Manufacture of tax-free goods
2. Generation of electricity including captive power
3. Works contract 

Q.Whether input tax credit will be available for works contract or transfer of rights to use etc.?
A.
Yes, the input tax credit will be available in case of works contracts (except capital goods) but it would not be available for transfer of rights to use goods. 

Q. Are there any prohibited goods for which input tax credit will not be admissible? 
A.Yes. Input tax credit will not be available for crude oil, Lignite, Petrol and High Speed Diesel besides purchases unrelated to goods under sale.

Q.How input tax credit will be available in case of branch transfer?
A.Input tax credit would be available in case of branch transfer after deducting 4 % as under:
In the case of reseller: 4% of the value of the goods so transferred
In the case of manufacturer: 4% of the value of the goods used in the manufacture of goods so transferred. 

Q. Meaning of exempted sale? 
A. An exempted sale is a sale on which no tax is levied, and no Input Tax Credit
is allowed.

Q.What is zero rated sale?

A.Sale in the course of export
Sale to International organizations
Sale to SEZ 

Q. We are not registered for VAT. Can we issue tax invoices ? 
A.No, If you are not registered for VAT you cannot issue tax invoices on which your customer VAT dealer can claim credit for the tax. 

Q. What type of documents we required for VAT Registration ? 
a Evidence of ownership over business premises or
b Self attested copy of Rent/lease agreement (Registered) if property is taken on Rent/lease. In case of unregistered agreement, you can pay Document Registration Fee at CTO office also through Challan.
c Self attested copy of latest Electricity Bill of Business premises in support of Electricity connection to business premises.
d At least One Evidence of proof of residence of Sole Proprietor, Person responsible, Directors, Partners: Self attested.
e EPIC Card, Passport, Driving License, Bank Statement, Telephone Bill, Electricity Bill, Photo Identity Card issued by Government, Public Sector, Recognized Educational Institution, Public Ltd Company,
f Copy of Bye Laws of Company, Partnership Firm, Society, Trust if applicable,
g Bank Statement for proof of Bank Account Number
h Photo Copy of PAN card

Q. How many Countries followed the Value added Tax (VAT) ? 
A.VAT is followed in over 160 countries. In India, VAT has replaced the earier State sales tax system. 

Q. WHAT IS THE EFFECT ON MY INPUT TAX IF I MAKE TAXABLE AND EXEMPT SALES? 
A. If you are making taxable and exempt sales you may only be entitled to claim a credit of input tax for the part related to taxable sales.  

3 comments:

  1. what is H" FORM ? AND WHAT IS USE ?PLEASE GIVE ME ANSWER.

    ReplyDelete
  2. what is DEPB Sales ? how it should be calculated at he time of audit?please give me answer sir.

    ReplyDelete
  3. Dear Mr.Malik,

    Click the following.

    http://accountingworldprincipals.blogspot.in/p/what-is-h-form-upload-h-form.html

    ReplyDelete

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