arkaraj (n/a) 04 February 2008

Tax liability & claim of credit..

What if my input tax is much higher than my output tax. for example i buy a commodity for Rs. 112.50 (VAT paid is 12.5% i.e. Rs.12.50 on 100 Rs. base price) i sell the same at 4% vat (i.e. output VAT is 4% on Rs. 150 which is my selling price, i.e. output vat comes ton Rs.6.00). Will i be able to claim credit of Rs. 12.50 - Rs. 6.00 - Rs. 6.50? Please clarify..

Regards,

Arkaraj Mukherjee

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2 Replies

Shambasiv (n/a) 06 February 2008

you are eligible to a total input credit of Rs.12.50 which you have paid on your purchase. And as you have paid output tax at Rs.6.00 on your sale, you can setoff your liability of Rs.6.00 with your input credit of Rs.12.50 and you will still be left with the remaining credit of Rs.6.50 i.e (Rs.12.50 minus Rs.6.00).

arkaraj (n/a) 06 February 2008

Please explain me one more thing which is ambigous to me :

1. If my cost price is Rs. 100 (applicable vat on this cost price is [url=mailto:VAT@12.5%]VAT@12.5%[/url], say), i sell that commodity after purchase at the selling price of Rs.200 + [url=mailto:VAT@4%]VAT@4%[/url]. What is my net vat tax liability & how is the calculation being done.

2. How is the input credit disbursed & output credit filed?

Regards,

Arkaraj Mukherjee.