TN VAT INPUT REVERSAL

[Rambabu Dompaka]

Dear Sir,

I read the following TN budget speech -

' Clause (c) under Section 19(5) of TNVAT Act, 2006 will henceforth be withdrawn to enable the dealers to claim Input Tax Credit on the inter-State sale of goods without ‘C’ form. This measure will eliminate additional burden on the dealers effecting inter-State sale of goods without ‘C’ form.'

Please clarify what it means.. Does it means that hereafter TN VAT dealers need not submit C forms for 2% sales..?

Regards,

Rambabu.D

[Ganeshan Kalyani]

At the outset, requirement of Form C is provided under CST Act and provision of retention is as per State VAT Act. Therefore in my view Form C would be required in any case.

[Ganeshan Kalyani]

Prior to the amended the input tax credit was to be reversed for interstate sale both against Form C or without Form C at different rate which means the corresponding input tax credit to the ratio of such sale was to be foregone. Now with the provision being done away, no need for the dealer to reverse input tax credit on interstate sale. Thanks.

[YAGAY andSUN]

Input Tax Credit reversal imposed at the rate of 3 per cent on the inter-state sale of goods as per proviso to section 19(2) (v) of Tamil Nadu Value Added Tax Act 2006, which was introduced with effect from 11.11.2013 had been withdrawn henceforth to make the manufacturing industries in Tamil Nadu more competitive with their counterparts in the neighbouring States. c) Clause (c) under Section 19(5) of TNVAT Act, 2006 will henceforth be withdrawn to enable the dealers to claim Input Tax Credit on the inter-State sale of goods without ‘C’ form. This measure will eliminate additional burden on the dealers effecting inter-State sale of goods without ‘C’ form.

AI Summary

Input Tax Credit reversal removed, allowing claim on inter state sales without C form, easing dealer compliance burden. Withdrawal of the proviso imposing Input Tax Credit reversal on inter state sales without Form C allows dealers to claim input tax credit on such sales without executing Form C; the Form C requirement under the Central Sales Tax regime remains a distinct obligation.