What will happen to tax paid on capital goods?
It appears that ITC will be permitted of the taxes paid on capital goods. However, it may be permitted in a phased manner. 12.7 All the states are following different systems for granting ITC under VAT. In most of the cases, taxes paid on large number of goods purchased and expenses incurred are denied tax credit on one pretext or the other. What will be the scope of ITC under SGST? Yes, it is true. Many SGs have laid down number of restrictions on availment of ITC of the taxes paid on goods purchased and expenses incurred for the business. Definition of the term tax eligible for input credit, as provided under local VAT law, are restrictive. Even under the Service Tax, tax paid on large number of services is being not considered. This defeats the basic idea of avoiding cascading of taxes. Unfortunately, the draftsman turns the blind eye to the spirit of the proposed structure as announced by the policy makers. Statutes are drafted in such a way that tax credit is always permitted lowe
