is Set-off allowed?

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heena

heena (Querist)
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06 December 2008 Is Set-Off fully allowed on purchases from unregistered dealers??

G Muralidharan

G Muralidharan (Expert)
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06 December 2008 Under VAT, to have Input tax credit, goods must have been purchased from Registered dealers. If goods are not purchased from Registered Dealer, then the buyer shall have to pay Purchase tax. The purchase tax so paid can be adjusted against output tax payable to commercial taxes to department.

heena

heena (Querist)
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09 December 2008 thanks for the reply. but what is then the difference in the mechanism of vat paid to registered dealer & purchase tax paid to unregistered dealer, since set-off in both the cases will be available.?

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G Muralidharan

G Muralidharan (Expert)
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11 December 2008 In order to avail Input Tax Credit under VAT, while purchasing, tax should have been paid whether purchases are from the Registered Dealer or unregistered dealer. In the case of purchase from Regd dealer, selling dealer would have charged VAT Tax in the bill itself. But in the case of purchase from unregistered vendors, there won't be any such bill and no tax would have been imposed. Hence buying dealer should pay purchase tax and seek to set off against the output tax payable.