I want to know about goods eligible and not eligible for input tax credit under Karnataka VAT Act. And specially I want to know whether consumable goods in a limited company is eligible for Vat credit. This company is engaged in manufacturing of garments.
06 November 2013
List of eligible Input and restrictions thereof are dealt with sec 10 & sec 11 of the KVAT act,Pls go through. in case of any clarification , may write here again. consumable items which shall get consumed in manufacturing Garment would be eligible for ITC
02 August 2024
Under the Karnataka VAT Act, the eligibility for Input Tax Credit (ITC) on stores and spares depends on their usage in the course of manufacturing or business operations. Here’s how ITC generally applies to such items:
### **Eligibility for ITC on Stores and Spares**
1. **Usage in Manufacturing**: - If the stores and spares are used in the manufacturing process or in the maintenance of plant and machinery that are used in the production of taxable goods, you are typically eligible to claim ITC on VAT paid for these items. - This includes items like lubricants, spare parts for machinery, tools, and other materials used directly in the manufacturing process.
2. **VAT Paid on Purchases**: - Ensure that you have valid purchase invoices with VAT charged. ITC can only be claimed based on valid tax invoices issued by registered dealers.
3. **Provisions under the Karnataka VAT Act**: - The Karnataka VAT Act allows ITC on inputs that are used in the manufacture of goods that are sold or consumed in the course of business. - Ensure that the stores and spares are used in the production process and not for personal use.
4. **Conditions and Restrictions**: - **Documentation**: Maintain proper records and invoices to substantiate the claim for ITC. - **Non-Eligible Items**: Certain items may not be eligible for ITC if they are used for exempted or non-taxable goods or services.
5. **ITC on Capital Goods**: - If the stores and spares are part of capital goods (e.g., machinery), ITC on these might also be applicable but typically is claimed differently. Ensure you follow the specific provisions for capital goods if applicable.
### **Action Steps**
1. **Review Purchases**: Verify that the stores and spares purchased are used in manufacturing or business operations. 2. **Maintain Invoices**: Ensure you have proper tax invoices from suppliers. 3. **Consult with a Tax Professional**: For precise advice tailored to your specific situation and to ensure compliance with the latest regulations, consulting a tax advisor or accountant is recommended.
By following these guidelines, you should be able to determine your eligibility for ITC on stores and spares under the Karnataka VAT Act.
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