How is input tax credit to be claimed? Is there any requirement of a one to one correlation between input tax and output tax?
There is no need for a one to one correlation between input tax credit and output tax. Quite a large number of small business are under the misconception that input tax has to be adjusted against output tax on a bill to bill basis. The operation of the input tax mechanism is very simple. The dealer will be eligible to take credit of input tax in a tax period as specified on the entire purchases. The dealer would charge VAT at the prescribed rate of tax as is being done in the present system of levy of sales tax. The VAT or Output Tax payable is compiled on a monthly basis as is done now. The dealer can adjust the input tax eligible on the entire purchase in the tax period against the output tax payable irrespective whether the entire goods purchased is sold or not. For example, if the input tax credit in a particular month is Rs. 1000/-, the output tax payable is Rs. 500/-, the excess input tax of Rs. 500/- can be carried forward to the next tax period. Assuming no further input tax cr
There is no need for a “one to one” correlation between input tax credit and output tax. Quite a large number of small businesses are under the misconception that input tax has to be adjusted against output tax on a bill to bill basis. The operation of the input tax mechanism is very simple. The dealer will be eligible to take credit of eligible input tax in a tax period as specified on the entire purchases. The dealer would charge VAT at the prescribed rate of tax as is being done in the present system of levy of sales tax. The VAT or Output Tax payable is compiled on a monthly basis as is done now. The dealer can adjust the input tax eligible on the entire purchase in the tax period against the output tax payable irrespective whether the entire goods purchased is sold or not. For example, if the input tax credit in a particular month is Rs. 1,000/-, the output tax payable is Rs. 500/-, the excess input tax of Rs. 500/- can be carried forward to the next tax period. Assuming no furthe
Related Questions
- Can a dealer whose input tax credit exceeds the output tax payable in tax period or in a year claim refund of the excess credit of input tax?
- How is input tax credit to be claimed? Is there any requirement of a `one to one correlation between input tax and output tax?
- How is input tax credit to be claimed? Is there any requirement of a one to one correlation between input tax and output tax?
