Vat on inter unit transfer of store items

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Dear Friends,

One of my client has two manufacturing units/Factories at same location. They have only one Centralised Store which is situated in one of the unit (Unit-I), which also serves the requirement of other unit (Unit-II).

Now my query in this regard, whether the store items issued to other unit (Unit-II) shall be treated as sale and accordingly liable to VAT?...Please help me out.

 

Regards

Sameer.

Replies (3)

No there should not be any incidence of VAT. Levy of VAT gets fastened only on sale. Here there is no sale hence, no levy. However, if both the units are controlled by two difference companies or firms or in VAT terms if both the units have different TIN then it will be a sale.

Anywayz it does not make sense of charging same as output and taking the same as input.

 

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Inter Unit Transfer is excempt from Vat. Get From-I, if any, provided by state government for IUT transaction which will issued by transferee to the transferor and thus transferor will get excemption against this transaction.

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