TNVAT ITC reversal for CST 2% sales

[venkat eswaran]

Dear Sirs,

Tamil Nadu govt TNVAT issues amendment in ITC reversal  for 2 percent CST sales against C form as follows:

Till date  Inter state sales against C form [2 percent at present] no reversal of ITC required

from 11.11.13 inter state sales against C form - Input tax credit allowed in excess of 3 percent of Tax.

Kindly clarify what is that  ITC ALLOWED  IN EXCESS OF 3 percent OF TAX.

Whether we have to reverse  any ITC for 2 percent inter state sales and how much  to be reversed.

Pl give your valuable reply

Venkat

 

 

 

[Ravikumar muthusamy]

yes you have to reverse 3 percent ITC if you made CST 2 percent sales against c form if you availed ITC on vat purchased goods else if the goods  sold at the rate of CST 2 percent were  imported or CST purchased or stock transfer inward then there is no need to reverse.

Ravikumar chennai 9094043313 www.saitaxsolutions.com

[LAKSHMINARAYANAN TR]

 

The identification of amount of 3 percent ITC reversal for Traders will stay.  But lot of representation have gone from manufacturers to exclude this clause for them.  We need to wait till any clarification / amendment comes to this effect.   It will become very cumbersome activity for manufacturers and more complex if the items procured prior to current year and sold in the current year - tracking of ITC amount and explaining to VAT department will all invite litigations.

I think similar provisions exist in Gujarat VAT.  Experts of Gujarat VAT can throw light on this.

Regards

TR  Lakshmi Narayanan

[Nagarajan Kannan]

 

The business community has represented to the TN Govt not to pursue with this amendment as the date from which the amendment has to take place is yet to be notified.

Apart from this amendment, TN Govt has also amended the ITC rules w.r.to branch transfer. If the amendment comes into force, then ITC will be allowed in excess of 5 percent of tax in respect of branch transfer as against 3 percent of tax at present.

Regards

Kannan

 

[venkat eswaran]

Dear Sir,

Thanks for ur reply.  This CST sales 2 percent  ITC reversal is applicable to Nov13 return is it?

Pl provide the ITC reversal amount for the following exmaple.

Total ITC taken Rs. 5000/-

Total interstate  CST 2 percent sales [against C form]  is Rs.75000/- & Total sales is Rs.100000/-

How much ITC reversal i have to done. pl give calculation with the above example.

Thanks,

Venkat

[V MALATHI]

To Calculate this Rs.5000/100000*75000 and then 3/5 it will be captured as Rs.2,250/- it will be reversed or to pay the amount by Cheque.

This is Ok.  But in future we are having Audit if they can ask any segregate records it will be totally confused.  It we want to purchase under CST 2 percent what is the procedure itself?

[Guest]

hello malathi mam,

thanks for the formula,

i calculated Rs. 5000/100000*75000 answer shown Rs.3750/-

after that we have divide by 3? For cst 2 percent sales

[Guest]

hello to all,

thanks for the formula, pls clarify my doubt

i calculated Rs. 5000/100000*75000 answer shown  Rs. 3750/-

after that we have divide by 3? For cst 2 percent sales

[Nagarajan Kannan]

Dear All

Assuming the ITC of Rs 5000 is against 5 percent VAT purchase, then out of this 3 percent is Rs 3000.

(5000*(3/5). Simply we have to first calculate 3 percent out of the ITC. If the VAT rate is 14.5 percent ,

then the formula for calculating 3 percent is ITC*(3/14.5)

If CST sale is Rs 75000 out of the total sales amount of Rs 100000,

then the reversal formula is  (ITC 3 percent ) X (Interstate Sales/Total Sales).

In this case it is = 3000*(75000/100000) which is Rs 2250.

Hence Rs 2250 is to be reversed in the ST Return.

Hope the issue is clarified. 

Regards

N.Kannan

[AJESH KUMAR MADIKAI]

DEAR SIR

I have a doubt , as per your calculation my CST sales for the month is 75000/- against this, I have to pay CST 2 percent tax Rs.1500/-. So my doubt is apart from this CST Tax Rs.1500/- I have to pay again this CST Reverse credit amount Rs. 2,250/-  to the department?

Please give your reply.

[Nagarajan Kannan]

The amount of Rs 2250/- has to be adjusted with the ITC available

and the balance amount of VAT needs to be paid. If there is no

VAT liability then the balance ITC has to be carried forward after

reversing the credit for CST sales.

Regards

N.Kannan

[Guest]

What is the section/rule to be quoted on the Annexture-III for the above reversal type.

[Nagarajan Kannan]

Section 19(2)(v) of TN VAT Act 2006.

Regards

N.Kannan

[Shanmugam Sreedevi]

Sir

we are also purchasing materials from interstate with CST2 percent .  We are doing sales local ie tnvat 5 percent , cst 2 percent & cst 5 percent . We have paid Vat 5 percent after adjusting ITC Claimed.

We have also to reverse 3 percent of ITC, even if we purchased materials from other state also and after adjusting ITC VAT paid.

Please clarify

[LAKSHMINARAYANAN TR]

Ms Sreedevi,

Question of availing input credit will not arise for inter state purchases.  Accordingly

Sec 19(2)(v) - reversal of ITC on inter state purchase cannot arise.

Input reversal is only on ITC Availed from TNVAT purchase materials and used for / soldas Inter state Sales -

Hope this would clarify your query.

[Nagarajan Kannan]

In my view, If you are able to keep separate stock registers for Interstate purchases and local purchases

and can correlate each of the sale invoices to the respective purchases, then only the Interstate

sale our of Interstate purchase will be exempt from ITC reversal. Else the general formula

will apply. Please check with your CTO/AC on this because the VAT Rule did not explain

as to how this has to be done.

Regards

N.Kannan

[venkat eswaran]

DEAR ALL,

We heard that Dealers in TN have filed writ petition in Madras high court against TNVAT ITC reversal. The judgement delivered there is NO ITC Reversal for MUNUFATURERS  applicable.

Is it correct? kindly clarify. IF it is true how we have to recover the ITC reversal amount paid for 3 months Nov, Dec & Jan14

Kindly share your views

Thanks

G Venkateswaran

[Vasan Priya]

I would also like to have clarity on the situation whether a company have two percent of ITC viz., 5 percent and 14.5 percent , what is percent of "Rate of ITC" to be considered.  On my view we can take the Weighted avg.    Also was noted that Chennai High Court given clearance for not reversing the ITC for Manufacturers.

Need your views pl.

[vasanthi siva]

Dear Sir,

We are doing   5 types of sales .

1. labour  sales  (mtrl will be supplied by party)

2. Exempted sates  (Agaisnt CT 3)

3. Exports sales (Direct export)

4.cst sales  (2 percent sales)

5. local vat sales. ( 5 percent sales)

how can we calculate the reversal of credit.

please clarify

vasanthi(9940660292)

[yash arya]

It was brought out in these columns that TVS Group has got the Stay orders by HC,Chennai.

Can you share with me the details of Stay Order so that other Dealers can  follow suit.

-Shekar R

[Guest]

Dear All,

I want to know the consequences for default in showing Reverse Credit in VAT Return.

AI Summary

ITC reversal for interstate C form sales requires proportionate credit apportionment and reversal under TNVAT rules. ITC reversal applies where ITC was claimed on local VAT purchases and goods are sold interstate against C forms: determine the portion of ITC equivalent to the prescribed percentage of the VAT rate on purchased goods, then apportion that ITC by the ratio of interstate C form sales to total sales. Reverse the apportioned amount in the VAT return and adjust against available ITC; purchases under CST, imports, or identifiable stock transfers generally avoid reversal if traceable. Noncompliance may attract statutory penalties.