31 December 2009
If a company is directly selling interstate. they only have to pay CST and no VAT. CST being only 2%
But in case of stock transfer they avoid CST but pay State VAT at around 12.5% for which they cannot get credit as it is paid in different state than the input state.
So why is it beneficial for companies to open depots in each state.
31 December 2009
HI, If you consider a company as a whole, it can claim set off in relation to purchase only once. Whether that is taken in for e.g. Maharashtra or Gujrat, it will be revenue neutral.
As regards to opening of depo, it is more for business convinience. It may not be necessary that company has in hand order all the time. So for early deliveries and management they are openings depos in various places.
31 December 2009
Thanks for your answer Nitin. But if a company is in one state and if it makes a sale in another through a depot there. He charges VAT in the second state. SO how can he get credit for VAT in the second state for the input in the orgin state. I think interstate credit is not allowed in VAT.
CAclubindia
