17 January 2014
Respected experts, I have a query related to input vat reversal in Madhya Pradesh VAT Act. Actually,One of my client is a manufacturer and he is making Taxable as well as tax free goods.The problem is that the raw material is being used for making both type of goods but we are unable to account for them seprately.Should i reverse full VAT amount or there is any other way for this condition?? Please refer Section or Rule of Madhya Pradesh VAT Act. Prompt reply will be appreciated. Thanks in advance
17 January 2014
It is a common matter referred in all vat laws in India.In this case you have proportionately allocate the input into taxable and non-taxable part. The bifurcation can be done either on quantity or on value basis.Supose you analyse a produt(say taxable) on its cost composition.Let 100 units of taxable goods have a price of Rs10,000/-,reduce it by(for ex) 10% profit(Rs1000),overhead20%(2000),labour 20%(Rs2000),the balance 50%(Rs5000).Out of this material cost,if a particular component content is 40%,its purchase value is Rs2000. Calculate its input and avail it.The same formula can be applied for other taxable purchases also.Do not bother about the consumption done for non taxable goods.....mjk
21 February 2014
This is normal procedure being adopted by AO, if same material is being used for taxable output and exempted output, you have to provide bifurcation of both. you are eligible for ITC only on taxable outputs.
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