Reversal of credit.

This query is : Resolved

P.Gopinath (Querist)
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03 December 2008 At the time of Local purchase,we are availing vat credit 4% or 12.5%.When we return the goods thro vat Invoice,we are charging 4% VAT.Should we credit vat credit 4% or 12.5%? i,e,similar treatment as cenvat in excise or can it be adjusted thro purchaes.Can anyone thro light in this matter?

Taxguy

Taxguy (Expert)
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03 December 2008 This illustration should solve ur problem

In VAT,

when you purchase raw material or goods for resale you pay 4% on say 100

Tehn you manufacture or resell it for say 120 and tax the sale at 4%

You will get credit of Rs.4 against your collection of tax of Rs.4.80 You have to pay only .80 to govt. Only your profit or value addition is taxed.