Availing input vat of dpeb licence purchase

This query is : Resolved

Anil Kumar (Querist)
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08 November 2013 We have made a purchase of License to pay import duty and get TAX Invoice. Can we avail input VAT and adjust against Output vat.

Thanks & regards

CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
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08 November 2013 for which state this query is ?

if it is in treated as goods then yes, if not then no.

its my view, but it is different for different state.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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15 July 2024 The ability to avail input VAT (Value Added Tax) on a Duty Paid Entitlement Certificate (DPEC) or License purchase and adjust it against Output VAT depends on the specific tax laws and regulations in your jurisdiction. Here are some general considerations:

### Input VAT on DPEC or License Purchase:

1. **Nature of DPEC or License**:
- A Duty Paid Entitlement Certificate (DPEC) or License is typically issued under certain export promotion schemes or for specific import/export activities. It allows the holder to import goods without paying customs duty upfront, subject to certain conditions.

2. **Input VAT Eligibility**:
- In many jurisdictions, VAT paid on goods and services used for business purposes, including expenses related to import/export activities, can be eligible for input VAT credit.
- However, the eligibility to claim input VAT on DPEC or License purchases depends on whether these expenses are considered to be part of taxable supplies and are used for making taxable supplies (outputs).

3. **Documentation and Compliance**:
- To avail input VAT on DPEC or License purchases, you typically need to ensure that:
- The DPEC or License purchase is directly related to your business activities.
- You have proper documentation, such as invoices, showing VAT paid on the purchase.
- The VAT charged complies with local tax laws and regulations.

### Adjusting Input VAT against Output VAT:

1. **Usage for Taxable Outputs**:
- Input VAT can generally be adjusted against Output VAT on taxable supplies made by your business. If the DPEC or License purchase is directly related to taxable outputs (sales), and you have valid VAT invoices, you should be able to adjust the input VAT accordingly.

2. **Compliance and Reporting**:
- Ensure that all VAT adjustments are reported correctly in your VAT returns as per the requirements of your tax jurisdiction.
- Any VAT adjustments should align with the rules and regulations governing input VAT credits and adjustments in your country.

### Consultation with Tax Advisor:

Given the specific nature of DPEC or License purchases and their implications for VAT, it is advisable to consult with a tax advisor or VAT consultant who is familiar with the tax laws in your jurisdiction. They can provide tailored advice based on the specific details of your transaction and help ensure compliance with VAT regulations.

In summary, while input VAT on DPEC or License purchases may be eligible for adjustment against Output VAT, it is crucial to verify the specific requirements and conditions under local tax laws and seek professional advice to optimize VAT recovery and compliance.

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