Raj Ltd. of Madhya Pradesh made a total purchase of input and capital goods of ₹55,00,000 during the month of January, 2016. The following further information is available: Goods worth ₹9,00,000 were purchased from West
CS Professional · Advanced Tax Laws and Practice · PYQS · June 2016
Raj Ltd. of Madhya Pradesh made a total purchase of input and capital goods of ₹55,00,000 during the month of January, 2016. The following further information is available: Goods worth ₹9,00,000 were purchased from West Bengal on which central sales tax @ 2% was paid. The purchases made in January, 2016 include goods purchased from unregistered dealers for ₹21,50,000. It purchased capital goods (not eligible for input credit) worth ₹9,50,000 and those eligible for input credit for ₹9,00,000. Sales made in Madhya Pradesh during the month of January, 2016 is ₹10,00,000 on which VAT @ 12.5% is payable. Assuming that all purchases made are exclusive of tax and VAT @ 4% is paid on them, calculate The amount of input tax credit available for the month of January, 2016; VAT payable for the month of January, 2016; and Input tax credit carried forward. Note: The input VAT credit on eligible capital goods can be availed in 36 equal monthly installments.
Answer & Explanation:
(i) Calculation of inputs tax credit available for January, 2016 Sr. No. Particular Amount (₹) A Purchase made in January, 2016 55,00,000 Less: Inter-state purchase (credit not available) (9,00,000) Less: Purchase from un-registered dealer (21,50,000) Less: Purchase of capital goods (not eligible for credit) (9,50,000) B Total purchase eligible for tax credit 15,00,000 Input tax credit available for January, 2016 i) Input tax credit on inputs (4% of ₹6,00,000) 24,000 ii) Input tax credit on eligible capital goods (4% of ₹25,000) 1,000 C Total Input tax credit available for Jan, 2016 25,000 Notes: Input tax credit on inputs eligible for tax credit, other than capital goods = ₹15,00,000 - ₹9,00,000 = ₹6,00,000 Input tax credit on capital goods could be availed in 36 equal installments = ₹9,00,000 * 4% * 1/36 = ₹1,000 (ii) Calculation of VAT Payable for January, 2016 Sr. No. Particular Amount (In ₹) A Sales made in Madhya Pradesh during January, 2016 10,00,000 B VAT on Sales (12.5% of 10,00,000) 1,25,000 C Less: Input tax credit (as calculated in part (i)) (25,000) D Net VAT liability for the month of Jan, 2016 1,00,000 (iii) Input tax credit carried forward Input tax credit carried forward for capital goods = 35 installments of ₹1,000 each Input tax credit carried forward for goods other than capital goods = nil
Topics: Indirect Tax
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