Sales tax ITC reversal credit, VAT + CST

[sivakumar rathinasamy]

Sir,

We are leather tanning industry and we are processing Job work order. We are purchasing chemicals for Job work and we are taking input credit of VAT for purchase value and we are already reversing some % between 5 to 7 of input vat. Still we got notice from the sales tax dept.

What is the standard minimum % and Maximum % reversal credit to be done and give us the formula.

Thanks with regards,

R.Sivakumar

Accounts Manager

Posts / Replies

[Pradeep Khatri]

Dear Siva,

It seems that you are not reversing the ITC as per the provisions mentioned in the TNVAT Act. Therefore TNVAT Department has issued a notice on your organization in this regard. Please check the relevant provisions as if you are doing jobwork only and not paying any output tax then you are not even allowed to avail the ITC under TNVAT Act read with Rules made there under.

Regards,

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[sivakumar rathinasamy]

Dear Sir,

Thanks for replying. But we are showing output vat for our sales at 70% of basic bill value and we are taking input credit for purchase of chemicals used for Job work.

Thanks with regards,

R.Sivakumar