ELIGIBILITY OF CREDIT OF TAX PAID UNDER THE TNGST ACT, 1959
ON GOODS HELD IN STOCK ON 31/12/2006
(Section 88(6) read with Rule 10(3))
All dealers registered for payment of VAT
(a) Registered dealers not liable to pay tax
(b) Dealers who have opted for composition of payment of tax – i.e
(1) Dealers who effect second and subsequent sale of goods procured from within the State (Section 3(4))
(2) Dealers opting for composition tax on Works Contract (Section 6)
(3) Dealers in foods and drinks opting for composition of tax (Section 8)
(c) A registered dealer, who effects zero rated sale
(a) In the case of traders, Traded goods, Containers, labels and other packing materials purchased from the registered dealer on or after 01/01/2006 and held in stock as on 31/12/2006.
(b) In the case of Manufacturers, Raw Materials, Containers, labels and other packing materials and traded goods. Manufacturers are also eligible for tax paid under the TNGST Act on raw materials embedded in Work in Process and Finished goods.
Proper working in support of the claim with reference to Work in Process and Finished goods should be maintained
(a) Capital goods purchased prior to 01/01/2007.
(b) Goods held in stock purchased from outside the State.
(c) Goods liable to tax under the TNGST Act,1959 but is exempt under the TN VAT Act,2006
Taxes eligible for credit
(Tax Paid includes Tax and Surcharge)
Where the purchase is effected from a from first seller in the State with invoice or bill showing the tax separately
The claim for input tax credit shall be allowed to the extent of the tax paid by him on the value of such goods
Where the purchases have been effected from second and subsequent dealer
The claim for input tax credit shall be restricted to the extent of the tax calculated on the purchase value of goods after deducting fifteen per cent and by using the tax fraction formula at the rate specified in the relevant Schedule under the said Act.
The tax fraction formula is,
(t x r) /(r+ 100)
where ‘ t ‘ is taxable sale inclusive of tax and ‘ r ‘ is the rate of tax applicable to the sale.
The dealer who claims input tax credit under this sub rule shall furnish separate statement.
such tax shall be eligible for claiming input tax credit
Form of Claim
The dealer shall submit, in duplicate, the following
(a) a stock inventory statement in Form V
(b) Photo copy of the related purchase invoice and bill
Time limit for filing of claim
The statement in Form V shall be submitted positively on or before 31/01/2007 It is likely that no extension of time would be granted.
Eligibility to adjust against output tax of eligible claim
The dealer shall avail the input tax credit immediately after the submission of stock inventory statement in From V.
Time Limit for adjustment of claim against output tax
The claim shall be availed within 6 months from the date of commencement of the act. i.e on or before 30/06/2007. The unavailed input tax credit, if any, after six months shall lapse to Government.
Verification of claim by assessing officer
The assessing authority shall verify the claim made by the registered dealer with reference to documents filed along with the stock inventory in From V and pass an order within ninety days from the date of receipt of the same, determining the amount for which the registered dealer is entitled to input tax credit and reverse the claim, wherever necessary.
Period for which the documents relating to the claim is to be preserved
The registered dealer shall ordinarily keep all original purchase invoices and connected documents relating to the claim for input tax credit on stock, for a period of five years from the date of commencement of the Act and shall produce such documents to the authority for scrutiny, if required.