Input VAT Credit as per GVAT Act or Rules thereunder

[SANJAY BAHETI]

One of my client engaged in manufacturing of Hydraulics Machines and also covered under Excise. He got one Export Order during current year.Accordingly He needs Wooden Boxes for packing of such machine being exported.so he purchases such wooden boxes from registered dealer.

Now query is whether my client can claim input vat credit @ 4%+1% on such wooden boxes i.e. packing materials necessary for export purposes or not as per Gujarat VAT Act,2003 or Rules made there under.

[YAGAY andSUN]

Dear Sanjay,

Yes, your client can avail the Input Tax Credit under the provisions of GVAT Act, reads with Rules made there under, provided, such wooden packaging is incorporated in your client's registration Certificate, otherwise it won't be possible and such incorporation must be prior to buying any inputs, components, raw material, packing material etc. Further, exports are considered under zero rate tax and either ITC or exemption/refund is available on the inputs/packing goods used in manufacturing of goods intended for export.

Regards

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

AI Summary

Input tax credit on packing materials can be claimed if included in registration certificate, with exports treated as zero-rated. The packing materials used in manufacture or packing of exported goods qualify for Input Tax Credit if the specific packing item is incorporated in the dealer's registration certificate prior to purchase; exports are treated as zero-rated and inputs/packing goods used for export attract entitlement to input tax credit or to exemption/refund under the Act and Rules.