1. In the course of the manufacture of taxable goods certain consumables such as furnace oil, lubricating oil for machinery etc are use. Can input tax credit be availed of in respect of such goods?
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Ans:-\u00a0<\/strong>Yes. As per section 2(xxiii) \u201cinput tax\u201d means the tax paid or payable under the Act by a registered dealer to another registered dealer on the purchase of goods in the course of business. Consumables (Other than fuel used in motor vehicles or vessels) are also covered by this.<\/p>\n

2. Will input tax credit be available on capital goods used in the execution of work contract?<\/em><\/strong><\/p>\n

Ans:-\u00a0<\/strong>No input tax credit will be available on capital goods, which are used in relation to supply of labour or service in the execution of a works contract.<\/p>\n

But where capital goods (other than those included in the negative list) notified as per SRO 324\/2005 dated 31.03.05) are used to convert any material to the form in which it is incorporated in the works contract or for storage of the goods transferred in the execution of works contract, input tax credit will be available.<\/p>\n

3. Can input tax credit be availed of on the purchase of petroleum products?<\/em><\/strong><\/p>\n

Ans:-\u00a0<\/strong>In the case of petroleum products included in the fourth schedule, no input tax credit will be available. In respect of other petroleum products, input tax credit will be available subject to the other provisions of the Act.<\/p>\n

4. Will input tax credit be available for the entire tax paid on eligible purchases?<\/em><\/strong><\/p>\n

Ans:-\u00a0<\/strong>Yes. Input tax credit will be available for the entire tax paid on eligible purchases. But no input tax credit will be available if any tax has been illegally collected.<\/p>\n

5. A dealer is making local, interstate and exports sales. Can he take set off for the input tax for the input used for his interstate and export sales against his local sale?
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Ans:-<\/strong>In the case of input tax in relation to goods sold on interstate, set off can be availed of if there is excess input tax after adjusting against the output tax liability of the dealer under the KVAT Act, and the arrear, if any, outstanding against the dealer for any previous return period.<\/p>\n

If the output tax is sufficient to set off the input tax in relation to export sales also, it can be set off. However, if the dealer claims input tax credit, he will not be eligible for any refund in relation to such export.<\/p>\n

6. What proof is required to claim input tax credit?<\/em><\/strong><\/p>\n

Ans:-\u00a0<\/strong>In order to claim input tax credit the dealer should have tax invoice issued by a registered VAT dealer showing the tax collection separately.<\/p>\n

The tax invoice should also show the TIN (Tax payer\u2019s Identification Number) of the buying dealer. A bill issued in Form No.8B will not be treated as a tax invoice for claiming input tax credit.<\/p>\n

For any query<\/p>\n