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PURCHASE TAX UNDER PUNJAB VAT ACT 2005

VAT - CST - GST - By: - AMIT BAJAJ ADVOCATE - Dated:- 26-2-2011 - Normally VAT is leviable on the sales of goods by a dealer but in certain circumstances and on certain goods tax is also levied on the purchases made under Punjab VAT Act 2005. Chapter III of Punjab VAT Act 2005 deals with the purchase tax. The provisions relating to purchase tax under PVAT Act are discussed as follows. When purchase tax is levied: Purchase tax is levied under PVAT Act 2005 in two cases firstly in respect of some .....

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on 19 will have applicability irrespective of any provision existing contrary to section 19 in the Act.. Purchase tax u/s 19 to be only on goods mentioned in Schedule H :Secondly from section 19(1) it is clear that VAT under PVAT Act 2005 will be levied on the taxable turnover of purchase of the goods specified in Schedule H at the rate applicable to such goods as per the schedules. There are five goods which have been prescribed in schedule H Paddy Wheat Cotton Sugar cane Milk, when purchased f .....

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ng of goods for the first time mentioned in schedule H after their production. Leviability of purchase tax on schedule H goods doesnot exempt the subsequent sales of such goods from VAT. Proviso to section 19(2) clearly provides that subsequent sales of such goods(on which purchase tax has been paid) shall be liable to VAT as per the provisions of the Act. Rate of Purchase tax: Since the purchase tax on schedule H goods is applicable as per the rates of tax on such goods as applicable in the sch .....

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e 5%, (after adding surcharge it will be 5.5%). Input tax credit of purchase tax paid: As per section 19(4) that purchase tax paid by a taxable person on goods mentioned in schedule H shall be admissible as input tax credit only if the following conditions are satisfied: The goods are sold within state or The goods are used for manufcture of taxable goods in the state for sale or The goods are sold in the cource of interstate trade or commerce or The goods are sold in the cource of export. Provi .....

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section 19 provides that if the goods mentioned in schedule H are sold interstate then ITC of purchase tax paid on such goods will be available only to the extent of CST chargeable under CST Act 1956. Thus it means if purchase tax @ 5.5% has been paid on a schedule H good say sugarcane, and such sugarcane is sold interstate by charging CST @ 2% then ITC of purchase tax will be available only to the extent of 2%. 2. Purchase Tax on turnover of purchase of goods in certain circumstances: Section .....

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