11 September 2012
If i buy polyster yarn from delhi having vat 5% & send to ludhiana for job work for making fabric have i pay any tax for it like entry tax
12 September 2012
Sir, Please recheck as from aug. 2012 punjab govt. levied entry tax on polyster yarn and polyster blend yarns AND please also chech if i buy polyyarn from ludhiana against c-form 2% tax (having VAT 5% IN LDH) and get delivery in ludhiana for job work AM i liable for any tax & is it legal. Fabric will deliver in delhi after job work (fabric is exepted for VAT AND ENTRY TAX)
28 July 2024
When dealing with the purchase, job work, and sale of goods across different states in India, you must navigate several tax regulations, including VAT (Value Added Tax), entry tax, and CST (Central Sales Tax). Here's a detailed look at your scenario, considering the latest rules and regulations:
### **1. **Purchase and Job Work Scenario:**
#### **1.1 **Buying Polyester Yarn from Delhi:**
- **VAT on Purchase:** If you purchase polyester yarn from Delhi and the VAT is 5%, this is the tax applicable in Delhi.
- **Entry Tax in Punjab:** - **Entry Tax Introduction:** As of August 2012, Punjab introduced entry tax on polyester yarn and polyester blend yarns. This tax is applicable when goods enter Punjab from other states. - **Liability:** When you send polyester yarn to Ludhiana (Punjab) for job work, you will be liable to pay the entry tax as per Punjab's regulations. The entry tax is an additional cost over and above the VAT paid in Delhi.
#### **1.2 **Job Work in Ludhiana:**
- **Tax Implications:** - **Entry Tax:** You need to pay the entry tax in Punjab. Ensure to obtain the necessary documentation and receipts for the entry tax paid. - **Job Work:** Generally, job work is not subject to VAT. The job worker will charge you for the job work services, which may not attract VAT.
#### **1.3 **Delivery of Fabric Back to Delhi:**
- **Tax on Fabric:** - **VAT and Entry Tax Exemptions:** Since the fabric is exempt from VAT and entry tax, there should be no additional tax liability on the sale of fabric once it is returned to Delhi.
### **2. **Buying Poly Yarn in Ludhiana Against C-Form:**
#### **2.1 **C-Form Purchase:**
- **C-Form Benefits:** - **Lower CST:** When you purchase poly yarn from Ludhiana against a C-Form, you are eligible for a lower CST rate (usually 2%) compared to the standard VAT rate applicable in the purchasing state.
- **Delivery in Ludhiana for Job Work:** - **C-Form Use:** The C-Form can be used for purchasing goods intended for use in manufacturing or job work. This is legal and permissible under the CST Act. - **VAT Applicability:** If you are purchasing yarn with VAT 5% in Ludhiana, the 2% CST should be applicable on such transactions, provided proper C-Forms are submitted.
### **3. **Summary of Tax Liabilities:**
1. **Entry Tax:** You are liable to pay entry tax in Punjab when sending polyester yarn from Delhi to Ludhiana for job work. 2. **C-Form Purchase:** Purchasing poly yarn in Ludhiana against a C-Form at a lower CST rate is legal. The fabric will be delivered back to Delhi, exempt from VAT and entry tax. 3. **Job Work:** Typically, job work charges are not subject to VAT, but ensure that the job work agreement is clear and documented.
### **4. **Recommendations:**
- **Maintain Documentation:** Keep detailed records of all transactions, including VAT paid in Delhi, entry tax receipts in Punjab, C-Forms, and job work invoices. - **Consult a Tax Professional:** For compliance and accurate tax handling, consult a tax professional who can provide specific guidance based on the latest regulations and your business requirements.
By adhering to these guidelines, you can ensure proper tax compliance while managing cross-state transactions efficiently.
CAclubindia
