We sell our manufactured items @ 6.05% (including surcharge). I have following query regarding input tax credit.
1. For packing of goods we purchase plywoods, etc. @ 14.30% (including surcharge). Whether we can claim ITC at full rate or @ 6.05% only?
2. We use lubricating oil, etc. in production process @ 14.30%. Whether we can claim ITC at full rate or @ 6.05% only?
3. For electric motors and AC drives purchased for installing on machinery to be sold AND also sometimes used for own machinery as Capital Goods both @ 14.30%. Can we claim full ITC for both purpose even if we sell our item at either 6.05% or 2% against form C?
23 October 2013
Mr Sony 10 Yes,you can claim ITC on all the above situations.When you charge for packing material in the invoice you should collect output vat on it.If you are not showing packing charges in the invoice the above ITC will not be avilable.Similarly ITC of consumables used in the production process and components fitted on the final products are also eligible,if procured within the state .....mjk
Can we claim ITC at full rate i.e.; @14.30% or shall we claim it @6.05%, the rate at which we sell our products.
Also, we show packing & forwarding charges in our invoice, but we add this amount after vat/cst amount on goods, i.e.; we do not charge vat/cst on packing and forwarding charges and we never saw any company's invoice charging vat/cst on packing charges. Please kindly clarify.
24 October 2013
In vat laws of almost all the states charges on packing and forwarding have been made taxable.They are taxed at the rate at which the packed goods are liable.For ex: if the packed goods are taxable @14.30% then the rate appies to the packing material also. Freight charges are also treated in the same way.If any material is used to pack exempted products then no tax on all.If you mention your state,concerned section of the law can be quoted.ITC can be claimed irrespective of the vat rate charged in invoice....mjk
I am still not sure about charging vat/cst on packing material. And also mostly limited companies issues form c for amount excluding packing & freight so it is not possible to charge tax on packing. Anyways thank you very much for your valuable reply.
CAclubindia
