1. There is no provision for submitting a supplementary claim statement. Last date for submitting the statement for input tax credit on opening stock is 31-1-2007.

2. Manufacturers to claim input tax credit with reference to WIP and Finished Goods. Please take a chance and there is every possibility that the government can finally come out with a notification that they may allow input tax credit on the WIP and finished goods stock also. If it is rejected as per present act, no problem. Suppose if it is given we should not lose the credit. Hence, it is ideal to calculate and claim the input tax credit for WIP and Finished Goods under separate statement. Since calculation of credit of tax paid on inputs embedded in WIP and Finished Goods would require certain assumptions, it is advisable to keep a detailed note on the details of basis of working of tax credit.

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3. Notional credit of tax paid on purchase from resellers eligible. Rule 13(b)(ii) of the TNVAT Rules allows credit to the extent of the tax calculated on the purchase value of goods purchased from second and subsequent dealer after deducting 15 per cent and by using the tax fraction formula at the rate specified in the relevant Schedule under the TNGST Act.

The tax fraction formula is, (t x r) /(r+ 100), where ‘t’ is taxable sale inclusive of tax and ‘r’ is the rate of tax applicable to the sale.

The dealer who claims input tax credit under this sub rule shall furnish separate statement.

For example, if the cost of goods purchased is Rs 101, inclusive of resale tax on 1 per cent and the tax chargeable at the point of first sale is 12.6 per cent inclusive of surcharge, the credit eligible is Rs 9.61 (Rs 101 X (85/100) X (12.60/112.60))

For example, if the cost of goods purchased is Rs 101 inclusive of resale tax on 1 per cent and the tax chargeable at the point of first sale is 4.2 per cent inclusive of surcharge, the credit eligible is Rs 3.46 (Rs 101 X (85/100) X (4.2/104.2))

4. Notional Credit on Purchase of Declared goods from resellers

In the case of declared goods, tax would not have been charged on resale. The tax credit eligible would have to be calculated on the price charged in the resale bill.

Vinod Kuriakose

(The writer can be contacted at feedback2vinod@yahoo.co.uk)