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Doubt in TNVAT

CA J.Alamelu lakshmi (Chartered Accountant) (852 Points)

25 February 2011

Acc to TNVAT Act, 2006 sec 3, it is said that dealers whose T/O (comprising only of local sales) does'nt exeed 10 lacs, need not collect tax during sale.

Further acc to sec 41 of the Act, if a dealer collects tax when his T/O is below 10 lacs, the sum so collected shd be remitted to the Govt and is entirely forfeited.

Does this mean that he cant avail input tax credit ? or have I understood the sections incorrectly?

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2 Replies

Lalit Kumar (Vice President ) (2213 Points)
Replied 25 February 2011

if a dealer cannot and is not supposed to collect tax cos of the fact that he falls under the exemption given under VAT (<10Lacs) turnover, he cannot claim the Input tax Credit (ITC means on purchases of Raw materials watever tax he pays he cannot claim tat).. The second point which u asked is totally diff to ITC.. Suppose while making a sale the dealer collects tax(VAT), watever amount he has collected he has to give it to the Govt immdeiately by filing a return.

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sundaresan (partner) (288 Points)
Replied 28 February 2011

I agree to the person who said. In mean while if you u r having any purchase form otherstate (Register dealer) you can avail ITC if your turnover exceed Rs. 5 Lakhs.