20 Input Tax Credit
(1) After the commencement of the Act, where any dealer gets registered as a VAT dealer or where the authority prescribed registers any dealer as a VAT dealer under Rule 11 (1), such dealer shall be eligible for input tax credit as provided under subsection (2) (b) of Section 13. The claim shall be made on Form VAT 118 within 10 days from the date of receipt of VAT registration. The goods on which the input tax credit is claimed or allowed shall be available in stock on the effective date of VAT registration. The documentary evidence for such claim shall be on the basis of a tax invoice issued by a VAT dealer for the purchases made and the input tax credit allowed on Form VAT 119 shall be claimed on the first return to be submitted by such dealers. The prescribed authority shall issue such Form VAT 119 within 10 days of receipt of Form VAT 118.
(2) The following shall be the items not eligible for input tax credit as specified in subsection (4) of Section 13,-
(a) all automobiles including commercial vehicles / two wheelers / three wheelers required to be registered under the Motor Vehicles Act 1988 and including tyres and tubes, spare parts and accessories for the repair and maintenance thereof; unless the dealer is in the business of dealing in these goods.
(b) fuels used for automobiles or used for captive power generation or used in power plants;
(c) air conditioning units other than used in plant and laboratory, restaurants or eating establishments, unless the dealer is in the business of dealing in these goods.
(d) any goods purchased and used for personal consumption.
(e) any goods purchased and provided free of charge as gifts otherwise than by way of business practice.
(f) any goods purchased and accounted for in the business but utilized for the purpose of providing facilities to employees including any residential accommodation
(g) crude oil used for conversion or refining into petroleum products;
(h) Natural gas, naptha and coal unless the dealer is in the business of dealing in these goods.”
(i) any input used in construction or maintenance of any buildings including factory or office buildings, unless the dealer is in the business of executingworks contracts and has not opted for composition.
(j) earth moving equipment such as bulldozers, JCB’s, and poclain etc., and parts and accessories thereof unless the dealer is in the business of dealing in these goods;
(k) generators and parts and accessories thereof used for captive generation unless the dealer is in the business of dealing in these goods.
(l) rice purchased by Food Corporation of India from VAT dealers or farmers or farmers clubs or associations of farmers in the State.
(m) rice purchased by Andhra Pradesh State Civil Supplies Corporation Ltd., from the Depots of Food Corporation of India, in Telangana or from any other VAT dealer in the State.
(n) refrigerators, coolers and deep freezers purchased by Soft Drink and icecream manufacturers not for use in their manufacturing premises.
(o) any goods purchased and used as inputs in job work
(p) PDS Kerosene purchased by wholesale dealers for the purpose of supplying to Fair Price Shops.
(q) Furnace Oil, LSHS and other similar fuels, used in the furnaces and boilers of the factories or manufacturing or processing units.
(r) Cement used in the manufacture of RCC ad PCC pipes, Cement Poles and prestressed Railway Concrete Sleepers
When any goods mentioned above are subsequently sold without availing any input tax credit, no tax shall be levied and recovered from a VAT dealer having been denied the input tax credit at the time of purchase. Any VAT dealer having purchased items mentioned above shall maintain a separate account or record without including such purchases in the purchase of eligible inputs taxable at each rate.
Whenever a VAT dealer makes a claim for input tax credit for any tax period, the tax paid on the purchases of above goods shall be excluded for arriving the eligible input tax credit. This principle applies to all the sub rules in this rule.
(3) Where all the sales of a VAT dealer for that tax period are taxable, the whole of the input tax may be claimed as a credit excluding the tax paid on the purchase of any goods mentioned in sub-rule(2).
(3-a) Where any VAT dealer pays tax at the rate of Fourteen and half percent (14.5%) on the sale consideration of a used or a second hand vehicle already registered in the State under the Motor Vehicles Act, 1988, he shall be eligible for notional input tax credit at the rate of Fourteen and half percent (14.5%) on the purchase price actually paid supported by documentary evidence. Such notional input tax credit shall not exceed the output tax payable on the sale of used or second hand vehicle by the VAT dealer.
(4)(a) Where any VAT dealer buys and sells the goods in the same form, the input tax credit can be claimed fully in respect of all the taxable goods purchased for every tax period excluding the tax paid on the purchase of any goods mentioned in sub-rule (2). Such VAT dealer is required to make a declaration in the Form VAT 200D for every tax period along with tax return.
(b) Where any common inputs like packing material are used commonly for sales of taxable and exempt goods (goods in Schedule I), the VAT dealer shall repay input tax related to exempt element of common inputs after making adjustment in the tax return for March by filing Form VAT 200B for the period of twelve months ending March. In Form VAT 200B, the eligible input tax credit shall be calculated by applying formula
A x B/C
A is the total amount of input tax for common inputs for each tax rate excluding the tax paid on the purchase of any goods mentioned in sub-rule (2).
B is the sales turnover of taxable goods including zero-rated sales.
C is the “total turnover” including sales of exempt goods.(c) This sub rule is not applicable if the VAT dealer is making exempt transactions.
(5)(a) Where the value of taxable sales is 95% or more of the total value for that tax period, the VAT dealer may claim credit for the full amount of input tax paid on purchases.
(b) Where the value of taxable sales is 5% or less of the total value, the VAT dealer shall not be eligible to claim input tax credit for that tax period;
(c) Such a VAT dealer covered under clause (a) and (b) above, shall make an adjustment in the month of March for the 12 month period ending with March on Form VAT 200B. In the Form VAT 200B, the eligible input tax credit shall be calculated by applying formula A x B/C The excess input credit claimed shall be paid back or the balance input credit eligible can be claimed in the tax return for March.
(d) This sub rule is not applicable if the VAT dealer is making exempt transactions.
(6) Where any VAT dealer is able to establish that specific inputs are meant for specific output, the input tax credit can be claimed separately for taxable goods. For the common inputs, such VAT dealer can claim input tax credit by applying the formula
AxB/C
for the common inputs used for taxable goods, exempt goods (goods in Schedule I) and exempt transactions:
Provided the VAT dealer furnishes an additional return in Form VAT 200A for each tax period for adjustment of input tax credit and also makes an adjustment for a period of 12 months ending March every year by filing a return in Form VAT 200B.
(7) Where a VAT dealer is making taxable sales and sales of exempt goods (goods in schedule I) for a tax period and inputs are common for both, the amount which can be claimed as input tax credit for the purchases of the goods at each tax rate shall be calculated by the formula
A x B/C
Provided the VAT dealer furnishes an additional return in Form VAT 200A for each tax period for adjustment of input tax credit and also makes an adjustment for a period of 12 months ending March every year by filing a return in Form VAT 200B.
(8)(a) Where a VAT dealer is making sales of taxable goods and also exemp ttransactions of taxable goods in a tax period, for the purchases of goods taxed at 14.5%, the input tax to the extent of 9.5% portion can be fully claimed in the same tax period;
(b) In respect of purchases of goods taxable at 1%, 5% and for the 5% tax portion in respect of goods taxable at 14.5%, the VAT dealer shall apply formula
A x B/C
for each tax period:
Provided the VAT dealer furnishes an additional return in Form VAT 200A for each tax period for adjustment of input tax credit and also makes an adjustment
for a period of 12 months ending March every year by filing a return in Form VAT 200B.
(9) (a) Where a VAT dealer is making sales of taxable goods, exempt sales (goods in Schedule I) and also exempt transaction of taxable goods in a tax period, for the purchases of goods taxed at 14.5%, the input tax to the extent of 9.5% portion can be provisionally fully claimed in the same tax period;
(b) In respect of purchases of goods taxable at 1%, 5% and for the 5% tax portion in respect of goods taxable at 14.5%, the VAT dealer shall apply formula
A x B/C
for each tax period:
Provided the VAT dealer furnishes an additional return in Form VAT 200A for each tax period for adjustment of input tax credit and also makes an adjustment
for a period of 12 months ending Mach every year by filing a return in Form VAT 200B.
(10) (a) In the case of a VAT dealer filing Form VAT 200B, the excess input credit claimed including 9.5% provisionally claimed for sales of exempt goods shall be paid back or the balance input credit eligible can be claimed in the tax return for March;
(b) for the purpose of this rule, the words A, B and C in the formula
A X B/C
shall carry the following meaning subject to clause (c) below:
A is the total amount of input tax for common inputs for each tax rate for the tax period, excluding the tax paid on the purchases of any goods mentioned in sub-rule (2).
B is the "taxable turnover" as defined under the Act for the tax period, which shall include zero rated sales, inter-state sales, exports and deemed exports of any goods, resulting from the use of common inputs for each tax rate.
C is the total turnover as defined under the Act for the tax period, relating to any goods, resulting from the use of common inputs for each tax rate.
(c) Where a VAT dealer makes exempt transactions for the calculation of input tax credit in excess of input tax of 5% for 14.5% rate goods, “the value of B” shall include the value of the goods transferred outside the State otherwise than by way of sale (transaction falling under Section 6(a) of CST Act 1956).(d) For the purpose of sub-rules from (4) to (9) of this Rule, the value of A is the amount of input tax relating to common inputs for each tax rate, B is the taxable turnover and C is the total turnover. For the purpose of Form VAT 200A, the value of A, B and C would be for that tax period whereas for the purpose of Form VAT 200B, the values of A, B and C would be the values for the period of 12 months ending March including March.
(e) Any VAT dealer opting for any method of input tax credit calculation specified from sub-rule (5) to sub-rule (9) shall be required to be under only one method for 12 month period ending March. The method of adjustment to be made in the return for March shall be on the basis of latest option exercised by the dealer upto March.
(11) The Deputy Commissioner concerned may impose any conditions or a particular method for a VAT dealer for the apportionment of input tax credit where the VAT dealer makes taxable and exempt sales and or exempt transactions.
(12) Where a VAT dealer opts to pay tax by way of composition or where a VAT dealer is exempt under Rule 17(2) (j), such dealer shall furnish Form VAT 200E along with Form VAT 200 for each tax period. Such VAT dealers shall calculate for each tax period the eligible input tax credit by excluding the turnover or value relating to composition/exemption in Form VAT 200E. In addition the VAT dealer shall furnish an adjustment return in Form VAT 200F for the month of March for a period of 12 months ending March making an adjustment of input tax credit in the Form VAT 200F.
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