commercial tax department

 

orissa, cuttack

 

 

vat awareness programme

 

user  guide

 

 

input tax credit

on

opening stock

 

 

 

                            Prepared for the use of tax-payers

  

For details : Please refer to the Orissa Value Added Tax Act, 2004 and Value Added Tax Rules, 2005

  

1.

What are the conditions for entitlement to  input tax  credit on opening stock as on 01.04.2005 ?

The conditions are :

(i)    the dealer claiming input tax credit on opening stock must be a registered dealer with TIN;

(ii)    the opening stock held must have been  purchased between 1.4.2004 to 31.3.2005,

(iii)   the opening stock must have been purchased on payement of tax or should have suffered tax under the Orissa Sales Tax Act,1947.

2.

Can input tax credit on opening stock be claimed in respect of all purchases ?

      Input tax credti on opening stock shall be admissible  only in respect on purchases made for,

(a)   resale,

(b)   use in manufacturing, (excluding capital goods)

(c)    use for packing of goods for sale,

(d)   use in the execution of works contract,

3.

Where input tax credit is not available on opening stock ?

(i)    Capital goods purchased prior to 1.4.2005.

(ii)    Goods for which no price has been paid or payable.

(iii)   Goods purchased inside the state for which no tax has been paid

4.

Can a dealer under the composition scheme claim input tax credit on opening stock ?

        No. A dealer under the compostion scheme is not entitled to claim input tax credit on opening stock.

5.

What are the goods eligible for input tax credit on opening stock in case of a manufacturer ?

(i)    Raw materials which goes into the compostion of the finished products;

(ii)    Consumables directly used in the process of manufactureing;

(iii)   Semi-finished goods;

(iv)   Finished goods ;

(v)    Packing materials for packing of finished products for sale.

6.

What are the goods eligible for input tax credit  on  opening  stock in case of a works contractors ?

(i)    Goods purchased for use in works contract;

(ii)    Goods used in the works in progress for which no bill has been raised nor any payment has been received.

7.

Whether a works  contractor can  claim  input tax credit on the opening stock of capital goods ?

        No, Capital goods used for execution of works contract are not eligible for input tax credit.

8.

What is the procedure to claim input tax credit on opening  stock ?

(a)   The closing stock inventory in Form VAT 607 shall be submitted within seven months from 1.4.2005;

(b)   The assessing authority having jurisdiction shall examine the inventory, verify the stock and the evidence produced and quantify the input tax credit on opening stock adminssible in Form VAT 608.

9.

What evidences are required to be produced against the claim of input tax credit on opening stock ?

(i)    Closing stock inventory as on 31.3.2005 ;

(ii)    Purchase details as against the opening stock to establish that it has been purchased between 1.4.2004 to 31.3.2005 ;

(iii)     The proof of payment of tax or the proof that the goods have suffered tax.

          Precisely, the evidence comprise the cash memo/bill/invoice issued by the selling registered dealer against the stock of goods held as on 1.4.2005 showing the tax charged or bearing the endoresment “First point tax paid”/ “Tax suffered”.

10.

What is the rate of tax applicable to input tax credit on opening stock?

        The rate of tax applicable shall be the actual rate at which tax has been paid or suffered under the Orissa Sales Tax Act, 1947.

11.

What is the manner in which input tax credit admitted, can be claimed ?

        Input tax credit admitted in Form VAT 608 shall be claimed in the monthly returns to be furnished, in Six equal installments.

  

for further information  and  clarification , the LOcal  office may be CONTACTED.