IMPORTANT FORMULAS
Formula 1:
Some
dealers will issue sale bills to aggregate amount i.e. including tax. Under the Tamil Nadu Value Added Tax Act,
2006, if VAT is charged separately input tax credit is allowable. But if the VAT is not shown separately the
purchases made through such bill will not be eligible for Input Tax Credit.
But
under the Central Sales Tax Act, 1956 such bills are acceptable and in such
cases the tax element and principal amount has to be arrived applying the
following formula.
Rate of Tax X Aggregate of Sale Price
100 + Rate of Tax
Example 1:
If the Commodity belongs to 14.5% and the bill amount is Rs.23200.00
14.5 x 23200 = 2940
100 + 14.5
Thus it is arrived that the Value of the commodity works to
Rs.20260.00
Tax @
14.5% Rs. 2940.00
Total Rs.
23200.00
Example 2:
If the Commodity belongs to 5% and the bill amount is
Rs.23200.00
5 x 23200 = 1105
100 + 5
Thus it is arrived that the Value of the commodity works to
Rs. 22095.00
Tax @
5% Rs.
1105.00
Total Rs.
23200.00
NOTE: This formula is applicable
for the stock of goods as on 1.1.2007 purchased after 1.1.2006. The formula should be applied after deducting
fifteen per cent of gross turnover. Under the TNVAT Act, 2006, the formula is
called Tax Fraction Formula.
Turnover x Rate of
Tax
Rate of Tax + 100
Formula 2:
Under the
Tamil Nadu Value Added Tax Act 2006, Capital Goods purchased for use in
manufacture of taxable goods are eligible for Input Tax Credit. The Capital
goods should be purchased from the registered dealers within the State with
valid TIN. Parts and accessories for Capital Goods already purchased and used
in manufacture of taxable goods is entitled to input tax credit relating to
such goods in the month of purchase or thereafter. Deduction of Input Tax
Credit shall be allowed only after the commencement of commercial production
and over a period of three years. Unavailed input tax credit on Capital Goods
after the expiry of three years, shall stand lapse to Government. Input Tax
Credit is allowable upto 50% in the same financial year and the balance of
input tax credit before the end of third financial year, provided that the Capital
goods are in the possession of the dealer.
Capital
Goods used in the manufacture of exempted goods were not eligible for Input Tax
Credit.
In
certain cases the capital goods purchased were used for the manufacture of
taxable goods and exempted goods and in such cases input tax credit is
allowable proportionately by applying the following formula:
Total Amount of Input
Tax paid Sales Turnover of Taxable
on the purchase of
capital goods X goods and Zero Rated
sales
-------------------------------------------------------------------------------
Total Sales Turnover
of taxable goods, zero rated sales and
sales of exempted
goods)
Formula 3:
As per section
19(5)(c) of TNVAT Act 2006, no ITC shall be allowed as the purchase of goods
sold or used in the manufacture of other goods and sold in the course of
interstate trade or commerce falling under section 8(2) of the CST Act 1956.
In
other words ITC has to be reversed for the interstate sales without the cover
of ‘C’ Form and sold at higher rate of tax.
In
such cases the reversal of ITC has to be worked out using the following
formula:
Total ITC X Sales Turnover without C Form sold at higher
rate of tax
Total Turnover
Formula 4:
Inter-State Sales
made under the Central Sales Tax Act 1956 were eligible for Input Tax Credit.
But
the Stock Transfer made to other State i.e. other than by way of sale under the
Central Sales Tax Act, 1956 is not eligible for Input Tax Credit and in such
cases Input Tax Credit disallowed by applying the following formula.
ITC REVERSAL FORMULA FOR STOCK TRANSFER TO OTHER STATES
Total ITC X
Stock Transfer Value X 3
Total Turnover 4
Formula 5:
According to
section 19(5)(c) of TNVAT Act 2006, no input tax credit shall be allowed on the
purchase of goods sold as such or used in the manufacture of other goods and
sold in the course of interstate trade or commerce falling under sub section
(2) of section 8 of the Central Tax Act 1956.
If
any dealer has claimed input tax credit paid on the purchase of goods made from
a registered dealers which has to be reversed proportionately. The reversal of
input tax credit has to be calculated using the following formula:
ITC x CST turnover
not covered by ‘C’ Form
Total Turnover (VAT +
CST)
Formula 6:
TAXABLE TURNOVER
CALCULATION FORMULA FOR WORKS CONTRACT
Contractors
executing Works Contract will effect purchases of taxable goods from the
registered dealers and also from the unregistered dealers or from unregistered
sources. The taxable goods purchased
from the unregistered dealers or unregistered sources will be utilized while
executing works contract and output tax payable on such purchase should be arrived
by applying the following formula:
(Total Works
Contract – Pure Labour) X Value of Tax not suffered
Total Value of goods used in Works Contract
(Total Works
Contract – Pure Labour) X Value of Tax not suffered
Total Value of goods used in Works Contract goods @ 14.5%
By applying the above formula, tax will be assessed on Sand,
Jelly, Stones etc., even though the commodities were procured/purchased from
unregistered sources / dealers.