Input tax credit
jagan
(Querist) 21 December 2011
This query is : Resolved
1. i would want to know whether input tax credit is transferable from a seller to a buyer under TNVAT act 2006.
2.when the output product is classified under Zero rating, the seller are entitled to credit on the input taxes. If the Dept considers the output sale as Exempted sale and not as Zero rate sale, then the credit for input taxes paid on major products(steel, cement) are being denied. In such event whether such amount of input taxes can be passed on/transferred?
please provide me some assistance in this regard completely in relation to TNVAT and applicable GOs or cases if any. thank you.
Raj Kumar Makkad
(Expert) 15 January 2012
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R.Ramachandran
(Expert) 15 January 2012
Dear Mr. Jagan,
While you will not be able to pass on the tax on an exempted product, what you can do is to add the amount of tax also in the sale price. That way, the sale price will give you the normal margin i.e. cost price inclusive of VAT + your margin.
In this way, while you will not be allowed to take credit of the VAT paid, you will also not be passing on any VAT separately by indicating the VAT in the invoice, since the sale happens to be exempt from VAT. There is no other way in which you will be able to tax from the buyer (what you call as input tax credit) to the seller.
