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Input Tax Credit - perils of the purchaser !

VAT and Sales Tax - Started By: - Srikanthan S - Dated:- 2-2-2016 Last Replied Date:- 16-7-2016 - New Rule 10(2-A) of the TNVAT Rules says that with effect from 29.1.2016,Every registered dealer who claims input tax credit to the extent of taxes paid on purchases of taxable goods specified in the First Schedule to the Act from the other registered dealers inside the State, shall establish, whenever it is deemed necessary by the assessing authority, that the tax due on such purchase of goods has .....

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only that, nothing stops the assessing authority to levy interest and penalty on such ITC disallowed.This is in line with Maharashtra Act/Rule and puts the entire onus on the assessee claiming ITC to prove remittance of tax by the Vendor into the Government treasury. It is extremely onerous on Dealers who have 100s and 1000s of Vendors to ensure this.The States should do on-line reconciliation of sales v purchase between any two TINs and through up unreconciled items. Also, the assessing author .....

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e Return. When the sales data from a TIN does not match with the purchase data of the other TIN, system throws up differences. However, it allows submission of the Return with the discrepancy. It would be ideal if an electronically generated mail goes to the Vendor and Purchaser on such unmatched items.With the advent of computerization of almost all the State Commercial Tax Departments, this kind of system checks should be possible. - Reply By Ganeshan Kalyani - The Reply = What I feel is that .....

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t is easier for the department people to cross check and verify whether the tax has been paid by a particular dealer or not just by sitting in their offices. How it is being expected from a purchaser to keep an eye on their respective suppliers when they pay tax. Initially few states have imposed the duty of getting confirmation of input tax from their supplier. Now it is applicable is most of the states. upon submission of the confirmation certificate the input credit availed on the purchase ar .....

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