VAT Input Credit incase of Interstate Stock transfer

Pls. clarify

One of our client is a Branch of Bangalore having H.O. at calculatta & other branches all over India, who are traders in Computers, Accessories etc.

Under KVAT they will buy goods @ 4% and part of the stock will be sold in Karnataka @  4% VAT & part of the stock will be sent to H.O. or other branches as stock transfer against Form-F.

1. Whether they are eligible for taking input credit on purchases fully and pay output taxes on local sales.

2. If so pls. give the relevant section & rule details. 

Replies (1)

Hi Harib,

 

The scenario explained by you is covered by Section 17 read with Rule 131 of KVAT provisions.  In case of stock transfers, input equal to 2% is fully eligible and balance 2% is eligible to be claimed in proportion to taxable sales and stock transfers.

 

Regards

Dharmaraju

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