Input Tax credit

[Jasbir Uppal]

Input Tax credit on purchased Carpets  purchase from registered dealer against Tax Invoices as per provision of UPVAT act  and latter on  such goods exempted by the U.P government through notification dated 13.05.2008. In that case I.T.C. can be allow under sub section 7 of Section 13 of the act ?    

[Surender Gupta]

Section 13(7) of UP VAT as referred by you allows the credit of tax paid on Inputs as long as you are not exempt in respect of sale of goods or manufactured goods are not exempt. Though, I have little knowledge about UP VAT, but the interpretation of section 13(7) reveals that credit would depend upon the taxability on disposal of goods after purchase.

AI Summary

Input tax credit availability depends on post-purchase taxability of goods under Section 13(7) of VAT. Whether input tax credit on carpets purchased from a registered dealer against tax invoices remains claimable when those goods are later exempt; applicability turns on the taxability of the goods upon disposal. Section 13(7) permits credit of tax paid on inputs provided the sale or disposal of the goods is not exempt, so credit depends on whether subsequent disposals are taxable.