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VAT INPUT

Prakash (B.Com CA final & CS final) (196 Points)

12 December 2008

HI, KARNATAKA VALUE ADDED TAX ACT, 2003

CAN SOMEBODY TELL ME WHETHER VAT INPUT CREDIT CAN BE AVAILED FOR THE VAT PAID ON THE FOLLOWINGS:

A) MACHINERY HIRE CHARGES

B) UNREGISTERED DEALER PURCHASE

PLEASE ...............

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Originally posted by :Prakash
"	HI, KARNATAKA VALUE ADDED TAX ACT, 2003 CAN SOMEBODY TELL ME WHETHER VAT INPUT CREDIT CAN BE AVAILED FOR THE VAT PAID ON THE FOLLOWINGS: A) MACHINERY HIRE CHARGES B) UNREGISTERED DEALER PURCHASE PLEASE ...............	"

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B.Nagesh (MBA- CS Execuitve) (151 Points)
Replied 12 December 2008

Hi Prakash,

I thing u can't avail, pls see the KVAT Rules and consult one more person.

10. Output tax, input tax and net tax.-

dealer means the tax payable under this Act in respect of any taxable sale of goods made by

that dealer in the course of his business, and includes tax payable by a commission agent in

respect of taxable sales of goods made on behalf of such dealer subject to issue of a

prescribed declaration by such agent.

(2) Subject to input tax restrictions specified in Sections 11,12,14,

1[17 and 18], input

1. Substituted by Act 6 of 2005 w.e.f. 19.3.2005.

(3) Subject to input tax restrictions specified in Sections 11, 12, 14, 17, 18 and 19,

the net tax payable by a registered dealer in respect of each tax period shall be the amount

of output tax payable by him in that period less the input tax deductible by him as may be

prescribed in that period and shall be accounted for in accordance with the provisions of

Chapter V.

(4) For the purpose of calculating the amount of net tax to be paid or refunded, no

deduction for input tax shall be made unless a tax invoice, debit note or credit note, in

relation to a sale, has been issued in accordance with Section 29 or Section 30 and is with

2004: KAR. ACT 32]

the registered dealer taking the deduction at the time any return in respect of the sale is

furnished, except such tax paid under sub-section (2) of Section 3.

(5) Subject to input tax restrictions specified in Sections 11,12, 14, 17, 18 and 19,

where under sub-section (3) the input tax deductible by a dealer exceeds the output tax

payable by him, the excess amount shall be adjusted or refunded together with interest, as

may be prescribed.

Value Added Tax 229
11. Input tax restrictions.-

tax payable, in respect of:

(1) tax paid on purchases attributable to sale of exempted goods exempted under

Section 5, except when such goods are sold in the course of export out of the

territory of India;

(2) tax paid on purchase of goods that are despatched outside the State, other than

as a direct result of sale or purchase in the course of inter-State trade or

commerce;

(3) tax paid on goods including capital goods as specified in the Fifth Schedule and

any other goods as may be notified by the Government or the Commissioner,

purchased

put to use for purposes other than for re-sale;
(a) Input tax shall not be deducted in calculating the net1[including when transferred in the execution of a works contract] or
1. Inserted by Act 6 of 2005 w.e.f. 19.3.2005.

(4) tax paid on purchase of capital goods other than those falling under clause (3),

except as provided in Section 12;

(5) tax paid on purchase of goods used as inputs in the manufacture, processing or

packing of other taxable goods despatched to a place outside the State not as a

direct result of sale or purchase in the course of inter-State trade, except as

provided in Section 14;

(6) tax paid on purchases attributable to naptha, liquified petroleum gas, furnace oil,

light diesel oil, superior kerosene oil, kerosene and any other petroleum product,

when used as fuel in motor vehicles, but when used as fuel in production of any

goods for sale in the course of export out of the territory of India or taxable goods

or captive power, input tax shall be deducted as provided in Section 14.

(7) tax paid under sub-section (2) of Section 3 on the purchase of fuel;

(8) tax paid under sub-section (2) of Section 3 on the purchase of goods excluding

fuel, until output tax is payable on such goods or other goods in which such

goods are put to use except when the said goods are exported out of the territory

of India;

(9) tax paid on goods purchased by a dealer who is required to be registered under

the Act, but has failed to register.

(b) Input tax shall not be deducted by an agent purchasing or selling goods on behalf

of any other person other than a non-resident principal

tax in relation to any registered dealer means the tax collected or payable under this Act on

the sale to him of any goods for use in the course of his business, and includes the tax on

the sale of goods to his agent who purchases such goods on his behalf subject to the

manner as may be prescribed to claim input tax in such cases.

B.Nagesh (MBA- CS Execuitve) (151 Points)
Replied 12 December 2008

A) MACHINERY HIRE CHARGES - U can avail Machinery used only for Manufacturing, otherwise can't avail, it will come under Rent domin.

B) UNREGISTERED DEALER PURCHASE- U can't avail because -UNREGISTERED DEALER under KVAT ACT-2003

RAJU (LEARNER) (1089 Points)
Replied 12 December 2008

Hi,

1. If VAT paid on hire charges of machinery which is being used for processing/manufacture of goods for sale for for hire charges, credit can be claimed.

2. In case of purchases from unregistered dealers, the dealer purchasing the goods has to be tax U/s.3(2) at the prevailing rate. In the month in which these stocks are sold, credit can availed of tax paid at the time of purchase.