C = The amount of the tax credit.

Tax credit

1. (1) Entitlement to tax credit. Subject to sub- section (2), a dealer who is registered or is required to be registered shall be entitled to a tax credit on the turnover of purchases arising during the tax period and for all imports of goods made during the tax period in the course of his activities as a dealer which are to be used directly or indirectly by him for the purpose of making:
   • (a) sales which are liable to tax under section 3 of this Act; and
   • (b) sales which are not liable to tax under section 7. Explanation. Sales which are not liable to tax under section 7 involve exports from Arunachal Pradesh whether to other States or Union Territories, or to foreign countries.
2. (2) No tax credit shall be allowed —
   • (a) in the case of the purchase of goods, for goods purchased from a person who is not a registered dealer;
   • (b) for the purchase or import of non-creditable goods;
   • (c) for the purchase or import of goods which are to be incorporated into the structure of a building;
   • (d) for goods purchased from a registered dealer who has elected to use a simplified accounting method; or
   • (e) to the dealers or class of dealers specified in the Fifth Schedule.
3. (3) Amount of tax credit. The amount of the tax credit to which a dealer is entitled in respect of the purchase or import of goods and for which a credit is allowed under sub-section
4. (1) is the amount of input tax arising in the tax period reduced in the manner described in sub-sections
5. (4) and (6).
6. (4) Where a dealer has purchased or imported goods and the goods are to be used partly for the purpose of making the sales referred to in sub-section
7. (1) and partly for other purposes, the amount of the tax credit shall be reduced proportionately.
8. (5) The method used by a dealer to determine the extent to which the goods are used in the manner specified in sub-section (4), shall be fair and reasonable in the circumstances. The Commissioner may:
   • (a) prescribe methods for calculating the amount of tax credit or the amount of any adjustment or reduction of a tax credit in certain instances; and
   • (b) after giving reasons in writing, reject the method adopted by the dealer and calculate the amount of tax credit. Explanation: A person may object in the manner referred to in section 75 to a decision of the Commissioner to reject a method of calculating a tax credit.
9. (6) Where
   • (a) a dealer has purchased or imported goods for which a tax credit arises under sub-section (1);
   • (b) the goods are to be exported from Arunachal Pradesh by way of transfer to a —
     • (i) non-resident consignment agent; or
     • (ii) non-resident branch of the dealer; and
   • (c) the transfer will not be by way of a sale made in Arunachal Pradesh; the amount of the tax credit shall be reduced by the prescribed percentage.
10. (7) For the removal of doubt, no tax credit shall be allowed for
    • (a) purchases of goods from an unregistered dealer;
    • (b) purchases of goods made in the course of interstate trade and commerce; or
    • (c) purchases or imports of goods which are used exclusively for the manufacture, processing or packing of goods specified in the First Schedule.
11. (8) Time for claiming tax credit. The tax credit may be claimed by a dealer only if the dealer holds a tax invoice at the time that the prescribed return for the tax period is furnished.