VAT registration in 2 states

Originally posted by : Rajesh Rathod
	Hi friends! My client is in A.P. and he wants to sale rice in Karnataka.  Now question is whether he register VAT in A.P or Karnataka.  If A.P why? If Karnataka why? and also he wants to export Pickles from A.P. to Karnataka.  Please advice

1.My client is in A.P. and he wants to sale rice in Karnataka. - he can do so by obtaining Central Sales Tax registration in AP

2. he wants to export Pickles from A.P. to Karnataka - he can sell products interstate, but EXPORT is meant to take place outside india. 

Thank you Mr. Sharma! Export means only interstate sales. If he register KVAT in same name & style at Karnataka for retail sales of pickles can he eligible for stock transfer?  whether it attracts any Tax liability for stock transfer.  Can you please explain me?

Hello friends!

Please help me or provide me URL for clarifications.

 VAT dealer following sub-rule( 6) of Rule 20:

          (Specific inputs to specific outputs)

USL, a VAT dealer is engaged in manufacturing of various products. The dealer is manufacturing  two separate products (product x and product y) wherein the dealer always makes taxable sales of product x and the product y is  meant for both taxable sales and stock transfers. The dealer maintains separate records indicating specific inputs required for specific outputs. For a tax period, the method and procedure for arriving eligible input tax credit is illustrated below:

                             PURCHASES ( INPUT)                SALES ( OUTPUT) 

RATE OF TAX           TURNOVER  VAT PAID TURNOVER    VAT PAYABLE

4% Goods for                    2,00,000           8,000               1,50,000            6,000

taxable goods                                                                (Product ‘x’)

4% goods common            4,00,000         16,000               3,00,000          12,000

for taxable sales &                                                          (Product ’x’

exempt transactions                                                               and ‘y’)

12.5% goods specific            32,000           4,000                       NIL              NIL

to taxable sales                                

12.5% goods common          40,000           5,000                       NIL              NIL

for taxable sales and

exempt transactions                         

Exempt transactions                   NIL             NIL               1,50,000              NIL

                                                                                     (Product ‘y’)

TOTAL                                                                              TOTAL

INPUT TAX           33,000                                 OUTPUT TAX            18,000       

USL is using specific inputs for specific taxable sales and certain common inputs meant for both taxable sales and exempt transactions. Hence, USL is eligible to claim full input tax credit for VAT paid on specific inputs for each tax period and for the VAT paid on common inputs, the eligible input tax credit should be arrived for each tax period by applying calculation A x B/C where ;

            A         =          Common input tax for the tax period for each tax rate

            B          =          Taxable turnover 

            C         =          Total turnover 

                                                                     (Including  value of exempt transactions)

  Sl.                          Descripttion    4% rate             Descripttion    12.5% rate

No  

1      Common input       16,000                      Common input            5,000

        tax paid in the                                         tax paid in the tax

        tax period                                               period

2      Apply calculation   16,000 x 4,50,000    8.5% portion              3,400

                                             6,00,000           (tax x 8.5/12.5           

3      Eligible input tax     12,000                      4% portion                 1,600

                                                                      (tax 4.5%/12.5%)

                                                                      Eligible input tax          1,600 x 4,50,000

                                                                      in 4% portion out               6,00,000

                                                                      of 12.5% rate paid.        = Rs.1,200

                                                                      Eligible input tax            3,400 + 1200

                                                                      credit for 12.5%            = 4600

                                                                      rate related to

                                                                              common inputs

Eligible input tax credit for

Specific inputs                                        :    Rs.8,000 (4%) + Rs.4,000 (12.5%)

                                                              :    Rs.12,000/-

Total eligible input tax credit for

the tax period                                         :    Rs.12,000 + Rs.16,600

                                                              :    Rs.28,600

VAT payable /Credit carried over          : Output tax – Input tax

                                                              :    Rs.18,000 – Rs.28,600

                                : (+) 10,600 credit carried over to next period

NOTE:   I)       USL should submit Form VAT 200 A every month, making adjustment of input tax credit to arrive and claim eligible input tax credit for that tax period for each rate.

              2)      Further, USL should also carry out adjustment of input tax credit for each tax rate for a period of 12 months ending March and submit such details in Form VAT 200B.

              3)      Such adjustment shall be made as below:

                        a)       any excess claimed in the monthly VAT returns shall be paid back in the return for March by adding it to the appropriate box in the output column for each tax rate.

                        b)      any balance credit eligible in the monthly returns shall be claimed is the return for March by adding it to the appropriate box in the input column for each tax rate.

Very great job! a lot of information I got.  Thank you so much...

very well explained by mr. sharma completely agree with him