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

 

 

 

[Nagarajan Kannan]

In addition to the reversed tax, you may have to pay penalty, if levied u/s 27(3)/27(4) of the TN VAT Act 2006.

NK

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.