Sir,
We are leather tanning industry and we are processing Job work order. We are purchasing chemicals for Job work and we are taking input credit of VAT for purchase value and we are already reversing some % between 5 to 7 of input vat. Still we got notice from the sales tax dept.
What is the standard minimum % and Maximum % reversal credit to be done and give us the formula.
Thanks with regards,
R.Sivakumar
Accounts Manager
Leather Tanning Company Challenges Input Tax Credit Reversal on Chemicals Under TNVAT Act; Faces Sales Tax Notice. A leather tanning company is facing issues with the reversal of input tax credit (ITC) related to VAT on chemicals purchased for job work. Despite reversing 5-7% of the input VAT, they received a notice from the sales tax department. A consultant advised that the company might not be complying with the TNVAT Act, which could be why the notice was issued. The company clarified that they show output VAT on sales at 70% of the basic bill value and take input credit for chemicals used in job work. (AI Summary)
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