INPUT TAX CREDIT

[GOWLI MALLIKARJUNA]

DEAR SIR

WE ARE THE MANUFACTURES OF SPONGE IRON IN ANDHRA PRADESH, STARTED OUR COMMERCIAL PRODUCTION ON 31.03.2011 AND SOLD THE GOODS ON CONSIGNMENT SALES( ONLY ONE TRANSACTION WORTH OF RS.3.50 LACS). WE CAN CLAIM FULL INPUT TAX CREDIT ON PURCHASE OF CAPITAL GOODS WORTH OF 30.00 LACS.

PLEASE ADVISE US.

[YAGAY andSUN]

Dear Gowli,

You can check the ITC Rules of KVAT Act in this regard.

Regards,

Sameer Malhotra - Consultant

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

AI Summary

Input tax credit eligibility for capital goods should be determined under KVAT Act ITC rules for manufacturers. Query asks whether a sponge-iron manufacturer who began commercial production and made a consignment sale may claim full Input Tax Credit on capital goods; response advises determining entitlement and conditions by reference to the ITC Rules of the KVAT Act.