10 September 2008
A manufacturing company buys some input item which is subject to VAT. A part of this input is used by the company in manufacturing a product which is not subject to VAT but to earlier Sales Tax. The company makes other products which are subject to VAT.
Now please provide your professional views on the manner in which the company shall compute the VAT credits that should be reversed for the product that is not under VAT. The company cannot do this on the basis of input/output ratio because that is complex and unascertainable.
17 September 2008
In principal it is clear that proportionate ITC should be reversed. Now the question is regarding method of computing such proportion. You may go through the rule of your state. In Assam, Rule-11 is taking care of such situations. I would also like to advise that, in any condition, please do not follow the procedure laid down in Rule-11 of AVAT Rules-2005, being the method of calculation prescribed therein is.......
CAclubindia
