ITC Reversal fof FY 2013-14

[Gopalasamudram Srinivasan subramanian]

If a Client has 5% Vat Purchase and 14.5% Vat Purchase

and VAT Sales 5%, Vat Sales 14.5% and Exempted WCT Sales, Service & Labour charges ( Exempted) CST 2% CST Sales against Form C, 5% and 14.5%CST sales

without Form what is the ITC Reversal to be arrived:

Sales not covered by Form C (5% & 14.5% CST Sales) x ITC availed (5% & 14.5% / Total Sales (CST + VAT)

In the Vat sales whether the exempted T/o also to be included.

Or ITC may reversed = Sales not covered by C Form x ITC availed /Total Sales (VAT+ CST) x 3/5

= Salest not covered by C Form x ITC availed / Total Sales (VAT+ CST) x 3/14.5

Department confused and taken the IT Reversal as

= Sales not covered by C Form x ITC availed /Total Sales T/o (VAT+ CST)

What one of the formula tobe adopted for 2013-14 Financial year

GS Subramanian

AI Summary

Input Tax Credit reversal: apportion ITC for mixed VAT and CST sales where C Form is absent and exempt turnover treatment matters.
The note questions the correct method for Input Tax Credit reversal for FY2013-14 where sales attract multiple VAT rates and CST, some with Form C and some without, and whether exempt VAT turnover must be included. It describes three approaches: a simple proportion of non Form C sales to total sales (VAT+CST), including exempt turnover in total sales, and a rate weighted pro rata formula applying tax rate multipliers, while noting departmental application of the simple proportional method.