Eligibility of set off
This query is : Resolved
04 February 2012
A dealer is liable to file monthly returns, purchased a raw materials by paying
tax @5% & 12.5% in the month of December 2011 and used the same in the
manufacturing of product and the said manufactured product were sold in the
month of February 2012. The rate of tax on the manufactured product was
5% under schedule C.
Situation 1
However, from 1st February, 2012, the product manufactured became tax free
and was classified under schedule A. Whether set off is available on purchase
of the raw materials ? How much ?
Situation 2
However, from 1st February, 2012, the product manufactured became exempt
by Notification issued u/s 8 of MVAT Act. Whether set off is available on
purchase of raw materials ? How much ?
Under MVAT Act, 2002
tax @5% & 12.5% in the month of December 2011 and used the same in the
manufacturing of product and the said manufactured product were sold in the
month of February 2012. The rate of tax on the manufactured product was
5% under schedule C.
Situation 1
However, from 1st February, 2012, the product manufactured became tax free
and was classified under schedule A. Whether set off is available on purchase
of the raw materials ? How much ?
Situation 2
However, from 1st February, 2012, the product manufactured became exempt
by Notification issued u/s 8 of MVAT Act. Whether set off is available on
purchase of raw materials ? How much ?
Under MVAT Act, 2002
06 February 2012
Goods purchased and used in manufacturing before 31st January dealer will be entitle for setoff of full amount of input tax.
SITUATION 1- For the purchases used after 01-02 for mgf of tax free goods covered under sch A, under the circumstances setoff will be reduced @2% of purchase price of raw material.Rule 53(2)(a)
Situation 2 _ If the goods are not covered under shc. A, but are exempted from tax under notification issued u/s. 8 (Not tax free under Sch A)in such case setoff will be available for total input.
SITUATION 1- For the purchases used after 01-02 for mgf of tax free goods covered under sch A, under the circumstances setoff will be reduced @2% of purchase price of raw material.Rule 53(2)(a)
Situation 2 _ If the goods are not covered under shc. A, but are exempted from tax under notification issued u/s. 8 (Not tax free under Sch A)in such case setoff will be available for total input.
06 February 2012
Thank you Prakash Kochar
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