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Answer Posted / abhivirthi tax and industrial
Tax paid on purchases is called Input Tax Credit. Input Tax
Credit available on all purchase bills should be arrived
(including the Input Tax Credit to be adjusted if any during
the previous month). Input Tax Credit is eligible only on
the taxable purchases made (from the registered dealers with
TIN in force) within the State and VAT shown separately.
Tax payable on the taxable sales or deemed taxable sales is
called Output Tax payable. The input tax paid on the taxable
purchases as above should be deducted from the output tax
payable and if the output tax payable is greater than input
tax credit, the balance amount to be paid to Government is
called Output Tax due/payable. If the Output tax payable is
lesser than the Input Tax Credit, the excess amount is
called Input Tax Credit available and the same will be
carried forward to the next month. The Input Tax Credit
carried forward to the next months will be adjusted in the
ensuing months.
EXAMPLE 1. (If goods are sold fully)
Purchase T.O. Rs.10,000.00 + VAT @ 14.5% Rs.1450.00 =
Rs.11,450.00
Rs.10,000.00 + VAT @ 5% Rs. 500.00 = Rs.10,500.00
Rs.10,000.00 + Exempt Rs. NIL = Rs.10,000.00
Total Rs.30,000.00 Input Tax Credit Rs.1950.00 = Rs.31950.00
Sales T.O. Rs.15,000.00 VAT @ 14.5% Rs.2175.00 =
Rs.17,175.00
Rs.11,000.00 VAT @ 5% Rs. 550.00 = Rs.11,550.00
Rs.10,500.00 VAT @ 0% Rs. NIL = Rs.10,500.00
Total Rs.36,500.00 Output Tax due Rs.2725.00 = Rs.39,225.00
VAT Payable/Due to the Government Rs.2725 -- Rs.1950 = Rs.
775.00
EXAMPLE 2. (If goods sold are partly)
Purchase T.O. Rs.10,000.00 + VAT @ 14.5% Rs.1450.00 =
Rs.11,450.00
Rs.10,000.00 + VAT @ 5% Rs. 500.00 = Rs.10,500.00
Rs.10,000.00 + Exempt Rs. NIL = Rs. NIL
Total Rs.30,000.00 Input Tax Credit Rs.1950.00 = Rs.31950.00
Sales T.O. Rs. 8,000.00 VAT @ 14.5% Rs.1160.00 = Rs.
9,160.00
Rs. 4,000.00 VAT @ 5% Rs. 200.00 = Rs. 4,200.00
Rs.10,500.00 VAT @ 0% Rs. NIL = Rs.10,500.55
Total RS.22,500.00 Output Tax due Rs.1,360.00 = Rs.23,860.00
Input Tax Credit carried forward to next month 1950 -- 1360
= Rs.590.00
Reply From:
ABHIVIRTHI Tax and Industrial Consultancy
R.R.JAGADEESAN
VAT PRACTITIONER AND INDUSTRIAL CONSULTANT
H-63, Palaami Enclave, New Natham Road,
Madurai-625014.
Cell: 9994990599
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