Exclusive HOLI Discounts!
Get Courses and Combos at Upto 50% OFF!
Upgrad
LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Cst sale against c form and tn vat

(Querist) 22 July 2014 This query is : Resolved 
Sir,
In my opinion, CST Sale against C form is 2% and it is applicable to All India. But in TN VAT if you raised interstate Bill against C form at 2% rate, you have to reverse 3% Input Tax Credit, available to you. What is it, sir.
In that case you have to pay totally 5%.
Can any body give me more details of
What Reversal of Input Tax Credit, and CST Sale against C form.
Please put your knowledge on it , Sir.
Anirudh (Expert) 22 July 2014
Your understanding of the requirement to reverse the input tax credit, and the applicable CST rate etc., is perfectly. BUT your query "What is it, sir" is not at all correct.

Let me explain for your benefit.

Suppose, "X" is a purchaser of goods for his own use, is "X" eligible for any input tax credit? The answer is NO. This is because, "X" is also not passing on the tax burden to anybody else.

However, if a trader purchases the goods for resale, he is entitled to take input tax credit. This is because as and when he sells the goods (which he will sell by adding his profit element to the original cost of purchase), he will be paying tax only on the profit margin (this is because though VAT will get attracted on the whole sale price (i.e. price + profit), still actual tax outflow will be only on the profit element, as the trader will be able to adjust the input tax credit availed by him.

The input tax credit is allowed only on the ground that the goods in question will be sold within the State and the State will get the incremental tax revenue on the profit element.

However, when the goods are sold outside the state through Interstate sale, the State government is not getting any VAT. (This is similar to the position of "X" - "X" is not getting tax credit as he is the ultimate consumer and is not selling the goods further within the State to anybody else).
T. Kalaiselvan, Advocate (Expert) 25 July 2014
The query has been very well addressed by expert Mr. Anirudh, hope the author is convinced?
Sajid (Querist) 26 July 2014
If, we sell goods without C form in the interstate sale is 5%. Though if, we sell goods with C form is 2%. The central govt. gives us subsidies rate of 2%.
But, TN VAT says that, if you sell goods in C form, you have to reverse the input tax credit. That means totally 5% VAT Rate. Then, what is the use of selling the goods in C form.


You need to be the querist or approved LAWyersclub expert to take part in this query .


Click here to login now



Similar Resolved Queries :