Composition of tax by certain registered dealers 19

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dealer to another registered dealer on the sale to him of any goods for resale or use in manufacturing or processing of goods for sale or purchase by him of goods mentioned in schedule VIII for resale or use in manufacturing or processing of goods for sale 'or purchase by him of goods mentioned in schedule VIII for resale or use in manufacturing or processing of goods for sale.'1 Explanation – Value Added Tax (VAT) is a multi point tax payable by manufacturer, processor, wholeseller and retailer on the value added on each point of sale with provision for credit of tax paid during purchase 'and also on each point of purchase of goods as mentioned in schedule VIII with provision for credit of tax paid during previous transaction.'2 10. Input tax credit :- (1) For the purpose of calculating the net tax payable by a registered dealer for any tax period after being registered, an input tax credit as determined under this section shall be allowed to such registered dealer for the tax paid or payable in respect of all taxable purchase of goods as mentioned in schedule VIII and3 all taxable sales other than such sales as may be prescribed subject to the following conditions: (a) Input tax credit on capital gods except those mentioned in negative list in Schedule IV shall be adjusted against tax payable by a dealer over a period not exceeding three years. Provided that in case of closure of business before the period specified above, no further input tax credit shall be allowed and input tax credit carried forward, if any, shall be forfeited. (b) In respect of exporting dealers, input tax credit may be spread over a period less than 3 years as may be prescribed. (c) Input tax credit is to be given only after commencement of sale of taxable goods 'and purchase of taxable goods as mentioned in shedule VIII.'4 (d) In respect of inputs used in taxable goods sent on stock / consignment transfer, tax paid in excess of 4% or the prevailing rate of C. S. T. on such inputs is to be credited.

1, 2, 3, 4 Inserted vide the TVAT (Amendment) Ordinance, 2007 (w.e.f 17-7- 2007) and subsequent