Kindly advise excess of vat input can be adjusted agst cst
This query is : Resolved
16 June 2014
Dear Sir,
Normally we take 2% out of 5% as VAT input credit and the Balance 3% is taken as our cost as per the latest amendment dated 11th November 2013 of TN VAT Act.
This month we have an excess VAT Input after adjustment of VAT liability to the extent of Rs.45 K.
Our CST liability is Rs. 1.92 lakh payable (5%). Normally we adjust the excess vat after adjusting vat liability to the CST Liability.
Now the CTO have told us not the adjust the excess VAT against CST liability and demanding to pay the full CST liability. Also he is asking to adjust the excess VAT liability against the VAT for next month.
Kindly advice whether the VAT excess input can be adjusted against CST liability or else we have to go as per CTO.
My mail id is k.karthik.trsc@trsforms.com
Thanks
Regards
k Karthik
Normally we take 2% out of 5% as VAT input credit and the Balance 3% is taken as our cost as per the latest amendment dated 11th November 2013 of TN VAT Act.
This month we have an excess VAT Input after adjustment of VAT liability to the extent of Rs.45 K.
Our CST liability is Rs. 1.92 lakh payable (5%). Normally we adjust the excess vat after adjusting vat liability to the CST Liability.
Now the CTO have told us not the adjust the excess VAT against CST liability and demanding to pay the full CST liability. Also he is asking to adjust the excess VAT liability against the VAT for next month.
Kindly advice whether the VAT excess input can be adjusted against CST liability or else we have to go as per CTO.
My mail id is k.karthik.trsc@trsforms.com
Thanks
Regards
k Karthik
17 June 2014
Dear Sir,
Could you any one reply please????
regards
karthik k
Could you any one reply please????
regards
karthik k
02 August 2024
In the context of VAT and CST in India, particularly under the Tamil Nadu VAT Act and the provisions relating to inter-state sales, the adjustment of VAT input against CST liability has specific rules. Here’s a detailed explanation based on the latest guidelines and your query:
### **Understanding VAT Input and CST Liability**
1. **VAT Input Credit**:
- **VAT Input Credit**: Typically, VAT input credit is available on purchases made within the state, which is used to offset VAT liability on sales.
- **Amendment Impact**: As per the amendment dated 11th November 2013 to the Tamil Nadu VAT Act, you can claim 2% VAT input credit out of the 5% VAT on taxable goods, with the remaining 3% being considered part of your cost.
2. **CST Liability**:
- **CST (Central Sales Tax)**: CST is levied on inter-state sales, and the rate is generally 2% or 5%, depending on the nature of goods and the applicable rate at the time of sale.
### **Adjustment Rules**
1. **VAT vs. CST**:
- **Separate Liabilities**: VAT and CST are treated as separate liabilities under the tax laws. Input VAT credit is used to offset VAT liability only, and CST is treated separately. This means that you cannot directly adjust excess VAT input against CST liability.
- **Legal Standpoint**: Generally, VAT input credit cannot be used to offset CST liability due to the different nature of these taxes. The VAT input credit can only be adjusted against VAT output tax, not against CST or other tax liabilities.
2. **CTO’s Directive**:
- **Compliance with CTO**: If the CTO has instructed that the excess VAT input should be adjusted against the VAT for the next month, it aligns with the standard practice that VAT credits should be used to offset VAT liabilities only.
3. **Practical Steps**:
- **Follow CTO’s Instructions**: Based on the current understanding of the tax laws and the instructions from the CTO, you should comply with their directive and adjust the excess VAT input against your VAT liabilities for the next month.
- **Pay CST Liability**: Ensure that you pay the full CST liability as demanded by the CTO.
### **Additional Actions**
1. **Consult Tax Advisor**:
- **Professional Guidance**: For detailed and specific advice, especially considering any recent changes or interpretations of tax laws, consult a tax advisor or legal expert who can provide clarity based on the latest regulations and your specific circumstances.
2. **Documentation and Records**:
- **Maintain Records**: Keep detailed records of all VAT and CST transactions, adjustments, and communications with the CTO. This will help in ensuring compliance and addressing any future issues that may arise.
3. **Review Latest Amendments**:
- **Check for Updates**: Stay updated with any new amendments or circulars issued by the Tamil Nadu VAT authorities, as these may impact how VAT and CST are handled.
By following these guidelines, you can ensure that you comply with the legal requirements and handle your VAT and CST liabilities correctly.
### **Understanding VAT Input and CST Liability**
1. **VAT Input Credit**:
- **VAT Input Credit**: Typically, VAT input credit is available on purchases made within the state, which is used to offset VAT liability on sales.
- **Amendment Impact**: As per the amendment dated 11th November 2013 to the Tamil Nadu VAT Act, you can claim 2% VAT input credit out of the 5% VAT on taxable goods, with the remaining 3% being considered part of your cost.
2. **CST Liability**:
- **CST (Central Sales Tax)**: CST is levied on inter-state sales, and the rate is generally 2% or 5%, depending on the nature of goods and the applicable rate at the time of sale.
### **Adjustment Rules**
1. **VAT vs. CST**:
- **Separate Liabilities**: VAT and CST are treated as separate liabilities under the tax laws. Input VAT credit is used to offset VAT liability only, and CST is treated separately. This means that you cannot directly adjust excess VAT input against CST liability.
- **Legal Standpoint**: Generally, VAT input credit cannot be used to offset CST liability due to the different nature of these taxes. The VAT input credit can only be adjusted against VAT output tax, not against CST or other tax liabilities.
2. **CTO’s Directive**:
- **Compliance with CTO**: If the CTO has instructed that the excess VAT input should be adjusted against the VAT for the next month, it aligns with the standard practice that VAT credits should be used to offset VAT liabilities only.
3. **Practical Steps**:
- **Follow CTO’s Instructions**: Based on the current understanding of the tax laws and the instructions from the CTO, you should comply with their directive and adjust the excess VAT input against your VAT liabilities for the next month.
- **Pay CST Liability**: Ensure that you pay the full CST liability as demanded by the CTO.
### **Additional Actions**
1. **Consult Tax Advisor**:
- **Professional Guidance**: For detailed and specific advice, especially considering any recent changes or interpretations of tax laws, consult a tax advisor or legal expert who can provide clarity based on the latest regulations and your specific circumstances.
2. **Documentation and Records**:
- **Maintain Records**: Keep detailed records of all VAT and CST transactions, adjustments, and communications with the CTO. This will help in ensuring compliance and addressing any future issues that may arise.
3. **Review Latest Amendments**:
- **Check for Updates**: Stay updated with any new amendments or circulars issued by the Tamil Nadu VAT authorities, as these may impact how VAT and CST are handled.
By following these guidelines, you can ensure that you comply with the legal requirements and handle your VAT and CST liabilities correctly.
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