Puchase (retail invoice)
This query is : Resolved
09 September 2013
Please Help on The Followings:
1) VAT credit is available if TAX INVOICE is there.
2) VAT credit is not available if RETAIL INVOICE / UNREGISTERED PURCHASES are there.
We paid VAT to Seller & No credit is admissible, whether VAT is payable to Government in Addition to VAT paid to Seller???
Please Guide on the Above.
Thank You.
Ketan Suru
1) VAT credit is available if TAX INVOICE is there.
2) VAT credit is not available if RETAIL INVOICE / UNREGISTERED PURCHASES are there.
We paid VAT to Seller & No credit is admissible, whether VAT is payable to Government in Addition to VAT paid to Seller???
Please Guide on the Above.
Thank You.
Ketan Suru
09 September 2013
DEAR KETAN SURU,
YOU HAVE NOT INDICATED WHICH STATE THE QUERY RELATES TO.
IN GENERAL, IN ADDITION TO TAX PAID FOR YOUR SALES, PURCHASE TAX IS APPLICABLE (AS PER YOUR STATE VAT ACT) FOR PURCHASES FROM UNREGISTERED DEALER.
YOU HAVE NOT INDICATED WHICH STATE THE QUERY RELATES TO.
IN GENERAL, IN ADDITION TO TAX PAID FOR YOUR SALES, PURCHASE TAX IS APPLICABLE (AS PER YOUR STATE VAT ACT) FOR PURCHASES FROM UNREGISTERED DEALER.
10 September 2013
Dear Rengaraj R.K. Sir,
-Company has taken TIN in Gujarat.
-Purchased goods from Madhya Pradesh (Retail & URD)
-Goods purchased in MP as Building Construction Project is there.
-Building Project is under construction.
-No Sale has yet been made.
My Question is whether VAT is payable to Government in addition to VAT paid on Retail Invoice & URD purchases?
Please guide on this.
Ketan Suru
-Company has taken TIN in Gujarat.
-Purchased goods from Madhya Pradesh (Retail & URD)
-Goods purchased in MP as Building Construction Project is there.
-Building Project is under construction.
-No Sale has yet been made.
My Question is whether VAT is payable to Government in addition to VAT paid on Retail Invoice & URD purchases?
Please guide on this.
Ketan Suru
10 August 2024
In the context of VAT and purchases, especially when dealing with retail invoices and unregistered dealers (URD) purchases, here’s a detailed guide:
### **1. VAT Credit on Tax Invoice vs. Retail Invoice**
- **Tax Invoice:** VAT credit (input tax credit) is typically available when you have a tax invoice from a registered dealer. The tax invoice should include details such as the seller's TIN, VAT amount, and other required particulars. This invoice allows you to claim VAT credit against your VAT payable on sales.
- **Retail Invoice / Unregistered Purchases (URD):** VAT credit is generally not available for purchases from unregistered dealers or for purchases supported by retail invoices. This is because the VAT paid to the seller cannot be claimed as input credit if the seller is not registered or if the invoice is not a tax invoice.
### **2. VAT on Retail and URD Purchases**
- **VAT Paid on Retail and URD Purchases:** If VAT was paid on purchases made with retail invoices or from unregistered dealers, and you cannot claim VAT credit, this VAT is considered a cost for your business. You will not be able to offset this against your output VAT.
- **VAT Payable to Government:** Since you cannot claim VAT credit on retail and URD purchases, you do not have an additional VAT liability to pay to the government over and above what you have already paid to the seller. Essentially, the VAT paid on such purchases becomes a part of your purchase cost.
### **3. Specific Case for Construction Projects**
- **Building Construction Project:** In the case of a construction project, if you purchase materials and services that are subject to VAT and the VAT cannot be claimed as input credit due to the nature of the invoice, this VAT remains part of your project cost.
- **No Sales Yet:** Since no sales have been made, there’s no output VAT against which you can offset input VAT. Therefore, any VAT paid on unregistered purchases or retail invoices cannot be recovered and should be considered part of your project expenses.
### **Summary**
- **VAT Credit:** Available with tax invoices from registered dealers.
- **No Credit:** Retail invoices and unregistered dealer purchases do not qualify for VAT credit.
- **Additional VAT Payable:** If VAT on retail invoices or URD purchases is not creditable, there is no additional VAT payable to the government. The VAT paid on such purchases is a cost and should be accounted for as part of your expenses.
- **Construction Projects:** VAT on materials and services from unregistered dealers or retail invoices should be added to your project costs.
### **Action Steps:**
1. **Ensure Proper Invoicing:** For future purchases, ensure that you receive tax invoices from registered dealers to benefit from VAT credits.
2. **Record VAT Costs:** Include VAT paid on retail invoices and URD purchases as part of your project costs in your financial records.
3. **Consult Local Tax Authorities:** Since VAT regulations can vary by state and may be subject to specific rules for construction projects, it’s advisable to consult local tax authorities or a tax professional for precise guidance tailored to your situation in Gujarat and Madhya Pradesh.
This approach will ensure compliance with VAT regulations and accurate accounting for your construction project costs.
### **1. VAT Credit on Tax Invoice vs. Retail Invoice**
- **Tax Invoice:** VAT credit (input tax credit) is typically available when you have a tax invoice from a registered dealer. The tax invoice should include details such as the seller's TIN, VAT amount, and other required particulars. This invoice allows you to claim VAT credit against your VAT payable on sales.
- **Retail Invoice / Unregistered Purchases (URD):** VAT credit is generally not available for purchases from unregistered dealers or for purchases supported by retail invoices. This is because the VAT paid to the seller cannot be claimed as input credit if the seller is not registered or if the invoice is not a tax invoice.
### **2. VAT on Retail and URD Purchases**
- **VAT Paid on Retail and URD Purchases:** If VAT was paid on purchases made with retail invoices or from unregistered dealers, and you cannot claim VAT credit, this VAT is considered a cost for your business. You will not be able to offset this against your output VAT.
- **VAT Payable to Government:** Since you cannot claim VAT credit on retail and URD purchases, you do not have an additional VAT liability to pay to the government over and above what you have already paid to the seller. Essentially, the VAT paid on such purchases becomes a part of your purchase cost.
### **3. Specific Case for Construction Projects**
- **Building Construction Project:** In the case of a construction project, if you purchase materials and services that are subject to VAT and the VAT cannot be claimed as input credit due to the nature of the invoice, this VAT remains part of your project cost.
- **No Sales Yet:** Since no sales have been made, there’s no output VAT against which you can offset input VAT. Therefore, any VAT paid on unregistered purchases or retail invoices cannot be recovered and should be considered part of your project expenses.
### **Summary**
- **VAT Credit:** Available with tax invoices from registered dealers.
- **No Credit:** Retail invoices and unregistered dealer purchases do not qualify for VAT credit.
- **Additional VAT Payable:** If VAT on retail invoices or URD purchases is not creditable, there is no additional VAT payable to the government. The VAT paid on such purchases is a cost and should be accounted for as part of your expenses.
- **Construction Projects:** VAT on materials and services from unregistered dealers or retail invoices should be added to your project costs.
### **Action Steps:**
1. **Ensure Proper Invoicing:** For future purchases, ensure that you receive tax invoices from registered dealers to benefit from VAT credits.
2. **Record VAT Costs:** Include VAT paid on retail invoices and URD purchases as part of your project costs in your financial records.
3. **Consult Local Tax Authorities:** Since VAT regulations can vary by state and may be subject to specific rules for construction projects, it’s advisable to consult local tax authorities or a tax professional for precise guidance tailored to your situation in Gujarat and Madhya Pradesh.
This approach will ensure compliance with VAT regulations and accurate accounting for your construction project costs.
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