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input tax credit for sale of capital goods

Thomas (proprietor) (26 Points)

19 September 2008

I am a dealer from Goa. If I purchase goods locally with VAT @ 12.5% and sell to an industrial unit (local) as capital goods with VAT @ 4% against declaration in form 30 (form 30 is for purchase of capital goods) , will I get input credit @ 12.5% or 4% ?

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3 Replies

CA MOHIT VAATS (Consultant) (554 Points)
Replied 21 September 2008

credit will be avalable only for 12.5%, not 4% b'coz that is your liability which shall be setoff against the credir taken ..

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CA V. Mohanakrishnan (Chartered Accountant) (401 Points)
Replied 01 October 2008

The rate is based on the classification of the product. The CENVAT credit is based on the input being used for the unexempted output.

Accordingly the credit is based on the amount of VAT rather than the % of VAT

Thomas (proprietor) (26 Points)
Replied 02 October 2008

Originally posted by :Thomas
"	I am a dealer from Goa. If I purchase goods locally with VAT @ 12.5% and sell to an industrial unit (local) as capital goods with VAT @ 4% against declaration in form 30 (form 30 is for purchase of capital goods) , will I get input credit @ 12.5% or 4% ?	"

Thanks for the replies. When I enquired with the VAT commissioner in Goa, He informed me that input credit can be claimed to the extent of 4% and the balance 8.5% is forfeited. In other words , the dealer has to bear the 8.5% loss for an exemption given to a manufacturer if he considers the goods to be capital goods.. I feel this is unfair since neither the VAT Act nor the rules specify this point. Any comments will be apreciated (even from other states as VAT rules are mostly uniform).