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Up entry tax

DK Mehta (Home) (40 Points)

22 June 2011

We are a manufacturing firm located in Hapur. As raw material we purchase steel plates from Ghaziabad and Delhi.

Both are outside the local zone, i.e. entry tax is applicable.

For Ghaziabad VAT @ 4% and for Delhi CST @ 2% is payable.

Entry tax @ 5% is payable wef 01Apr11. Can somebody illustrate with an example the amount to be deposited under Entry Tax head for these purchases. I am not clear about the rebate, if any, applicable.

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Sandeep Agarwal (Tax Advocate) (45 Points)
Replied 02 June 2012

suppose you have purchased steel plates of Rs. 1,00,000/- from Gzb. and on this purchase dealer has charged vat @ 4% i.e. 4,000/- and he has also charged freight of Rs. 1,000/- in the Tax Invoice also. Now the net Entry tax payable would be ascertained as under:-

Entry Tax @ 5% on 1,05,000/-(1,00,000+4,000+1,000)= 5,250/-

Less: Rebate of UP Vat paid on the above purchase=4,000/-

Net Entry tax liability =1,250/-

If we consider the same example for Delhi i.e. cost of plates is 1,00,000/- , CST charged 2,000/- suppose freight charged in invoice Rs. 1,000/- than calculation of entry tax would be @ 5% of 1,03,000/- (1,00,000+2,000+1,000)= 5,150/- In this case no rebate of CST of 2% would be admissible as the rebate is admissible in case of UP Vat paid/Payable.

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DK Mehta (Home) (40 Points)
Replied 04 June 2012

Thank you for your reply.

As we have now been made to understand the rebate of 4% (VAT Paid) on entry tax for purchase made from GZB is applicable ONLY if we are TRADING i.e. output of our product is same as input. However if we are manufacturing then our output is no more the same product as the input and hence no rebate will be allowed and full entry tax is to be paid. Your observations on this are solicited.

Sandeep Agarwal (Tax Advocate) (45 Points)
Replied 04 June 2012

It doesnt matter whether u r a trader or a manufacturer or whether your input and output products are same or different, the way of calculating net entry tax payable and claim of rebate will be the same as I told earlier.