Amendment
w.e.f. 01.04.2014: Vide Notification No. 40-Leg/2013 dated 15/11/2013
made affective wef 1/4/2014, one of the most important conditions which has
been recently introduced for availing input tax credit under Punjab VAT Act,
2005 is the first proviso to section 13(1) of the said Act.
The first proviso to section 13(1) read as
under:
“Provided that the input tax credit shall not
be available as input tax credit unless such goods are sold within the State or
in the course of inter-state trade or commerce or in the course of export or
are used in the manufacture, processing or packing of taxable goods for sale
within the State or in the course of inter-state trade or commerce or in the
course of export.”
In the old proviso which has been substituted (wef
1/4/2014) input tax credit was available if the goods are “for sale”
or are “for use” in manufacturing or processing of goods meant
for sale. Now w.e.f. 01.04.2014 the condition is the input tax
credit will be available when such goods are “sold” or are “used”
in the manufacturing processing of goods meant for sale.
What will be effect of the amendment:-
1. The above amendment has far reaching effects,
its implications would be that even if you purchase taxable goods for sale or
for manufacturing purposes, you will not get the input tax credit of tax paid
unless such goods are sold or are used in manufacturing processing. Meaning
thereby that the Input Credit on Stock lying at the End of Month shall not be
available to a person and amount of VAT to be PAID shall be paid by reducing
the input Credit on Stock.
2. Exporters will also be effected by this
amendment. The exporters now would get input tax credit of tax paid on purchase
of goods only when such goods are actually sold in the course of export. The
input tax credit proportionately may be retained on the basis of closing stock
available at the end of the month/year.
3. For manufacturers input tax credit of raw
material purchased will be available only when the such material is used in the
manufacturing processing. It would create problem for not only manufacturers to
keep account of stocks but would also for the assessing officer to come to a
conclusion when the raw material purchased by manufacturer was used in the
manufacturing process.
How to Account far the Vat Credit:-
As input credit is not available on the goods which is not used or which is not sold i.e. which is lying in stock on the given date there are two option for the dealers:-
1. Do not take input tax credit on purchase, make the entry on sale or on use (may be single entry for whole of the month .
or
2. Take the credit on purchase, at the end of month make reverse entry on input credit availed on the good lying in stock (In case of rolling mills on Raw material and on Steam Coal). Again take the credit of the amount which has been reversed on 1st day of next month. Pay the amount which is payable at the end of the month after reversal of credit
How to Account far the Vat Credit:-
As input credit is not available on the goods which is not used or which is not sold i.e. which is lying in stock on the given date there are two option for the dealers:-
1. Do not take input tax credit on purchase, make the entry on sale or on use (may be single entry for whole of the month .
or
2. Take the credit on purchase, at the end of month make reverse entry on input credit availed on the good lying in stock (In case of rolling mills on Raw material and on Steam Coal). Again take the credit of the amount which has been reversed on 1st day of next month. Pay the amount which is payable at the end of the month after reversal of credit
Rakesh K. Shahi Advocate 9780300415
