Tamil Nadu: Ordinance to bring provision of the Tamil Nadu VAT (Second Amendment) Act, 2010 into force with retrospective effect
The notification which was earlier effective from 19.8.2010 has been brought into effect from 1.1.2007 advising dealers that if input tax exceeds output tax, excess of input tax cannot be adjusted and will lapse. This will have an impact on VAT assessments from 1.1.2007 for all dealers has sold goods at a price less than the price of the goods purchased by him.
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TAMIL NADU GOVERNMENT
TAMIL NADU ORDINANCE No. 7 OF 2010
CHENNAI, 29th OCTOBER 2010
An Ordinance to bring provision of the Tamil Nadu Value Added Tax (Second Amendment) Act, 2010 into force with retrospective effect
WHEREAS, the Legislative Assembly of the State is not in session and the Governor of Tamil Nadu is satisfied that circumstances exist which render it necessary for him to take immediate action for the purpose hereinafter appearing;
NOW, THEREFORE, in exercise of the powers conferred by clause (1) of Article 213 of the Constitution, the Governor hereby promulgates the following Ordinance:—
1. This Ordinance may be called the Tamil Nadu Value Added Tax (Special Provision) Ordinance, 2010.
2. Notwithstanding anything contained in sub- section (2) of section 1 of the Tamil Nadu Value Added Tax (Second Amendment) Act, 2010 (hereinafter referred to as the 2010 Act) and in the notification of the State Government in the Commercial Taxes and Registration Department No. II (2)/CTR/527(b)/2010, published at page 1 in Part II - Section 2 of the Tamil Nadu Government Gazette Extraordinary, dated the 19th day of August 2010, section 2 of the 2010 Act shall be deemed to have come into force on the 1st day of January 2007.
28th October, 2010
SURJIT SINGH BARNALA
Governor of Tamil Nadu
EXPLANATORY STATEMENT
In order to protect the revenue of the Government, Section 19 of the Tamil Nadu Value Added Tax Act, 2006 (Tamil Nadu Act 32 of 2006) has been amended suitably by Tamil Nadu Act 22 of 2010 providing for reversal of the amount of the input tax credit for the goods over and above the output tax of those goods, in a case where a registered dealer has sold goods at a price less than the price of the goods purchased by him and the said amendment has been given effect to from the 19th August 2010.
2. Now, the Government have decided to give effect to the said amendment from the date of coming into force of the said Tamil Nadu Act 32 of 2006 (i.e.) from the 1st day of January 2007 itself, in order to prevent any loss to the State exchequer from that date.
3. The Ordinance seeks to give effect to the above decision.
(By order of the Governor)
S. DHEENADHAYALAN
Secretary to Government
Law Department
Weldone DC. But whether the lapsed input credit can be written off in the profit and loss account as an expenditure
ReplyDeleteSivakumar V
Dear CA Sivakumar Sir,
ReplyDeleteLapsed input credit (due to selling of goods at a lesser price than they were bought) is very much an allowable expenditure as per Sec. 37 of the Income Tax Act, 1961.
According to me, this is a tax lapsed which is not allowable as per TN VAT.
Since the same is not an offfence or prohibition by law, it is allowable as deduction as per Income Tax Act, 1961.
In short, It can be written off in the P&L Account as expenditure.
See it is reversable only when the cost price is less than sale price.Whether reduction of rate say 14.5% on purchase and 5% on sale as industrial inputs leads lapse of ITC. Cost Price is not inclusive of VAT. I am handling currently one such case with the CTO. Give your valuable opinion. Email ID: saravsomsundar@yahoo.co.in
ReplyDelete