Uttar Pradesh VAT Rules

Rebate of tax on certain purchase or sale

Where any tax is leviable on the sale or purchase of any taxable goods under any other State Act or on entry of any taxable goods into a local area under the Uttar Pradesh Entry of the Goods Act, 2001, the State Government may, by notification and subject to such conditions and restrictions, as may be specified therein, allow a rebate upto the full amount of tax levied on any specified point on the sale or purchase of such goods under this Act.

Input tax credit

1. Subject to provisions of this Act, credit of input tax to the extent hereunder provided, in respect of goods and in the circumstances mentioned below, shall be allowed to every dealer liable to pay tax-
   • where any taxable goods are purchased on or after the date the dealer becomes liable to pay tax, in respect of purchase of such goods –
     • credit of full amount of input tax if such goods are re-sold -
       1. inside the State; or
       2. in the course of inter-state trade or commerce; or
       3. in the course of the export of the goods out of the territory of India,
     • credit of full amount of input tax where such goods are used either in manufacture of any goods or in production of captive power and such manufactured goods are sold in the course of the export of the goods out of the territory of India;
     • except coal and petroleum products used as fuels, credit of full amount of input tax where such goods are used either in manufacture of any taxable goods or in production of captive power and such manufactured goods are sold either inside the State or in the course of inter-state trade or commerce;
     • for use as containers or packing materials, credit of-
       1. full amount of input tax, where such goods are used in packing of any taxable goods and such packed goods are sold either inside the State or in the course of inter-state trade or commerce;
       2. full amount of input tax where containers or packing materials are used in packing of any goods and where such packed goods are sold in the course of the export of the goods out of the territory of India;
       3. partial amount of input tax to the extent it is in excess of four percent of turnover of purchase of container or packing materials where such containers or packing materials are used in packing of any taxable goods and such manufactured taxable goods are consigned outside the State otherwise than as a result of sale.
     • for use as capital goods or captive power plant where such capital goods are exclusively used in manufacture of goods for sale by the dealer, credit of partial or full amount of input tax computed in the manner specified in clause (i) and clause (ii) of sub-section (2);
     • credit of partial or full amount of input tax according to provisions under foregoing sub-clauses, as may be applicable, in case of a dealer who, under section 27 of this Act, opts any scheme of payment of lump sum in lieu of amount of tax payable on the turnover of sales or purchases or both, as the case may be, during such period, where such goods are -
       1. held in closing stock on the last day of the period of such scheme in the same form and condition in which those were purchased; or
       2. used, consumed or utilised in manufacture, processing or packing of any taxable goods held in closing stock on the last day of the period of such scheme.
   • in respect of taxable goods purchased during a period of twelve months before the date of the commencement of this Act and held in opening stock on the date of the commencement of this Act by a dealer who is liable to pay tax on such date, credit of partial or full amount of input tax computed at the rate applicable under the Uttar Pradesh Trade Tax Act, 1948 or at the rate applicable under this Act, which ever is lower, on the turnover of purchase determined in the prescribed manner, subject to fulfillment of conditions stated below, namely:
     • the purchase or sale of such goods prior to the commencement of this Act, is liable to tax under the Uttar Pradesh Trade Tax Act, 1948; and
     • such goods are to be re-sold either inside the State or in the course of inter-state trade or commerce,
   • in respect of purchase of coal and any petroleum products, purchased on or after the date the dealer becomes liable to pay tax, credit of partial amount of input tax to the extent it is in excess of four percent of the turnover where such goods are used as fuels either in the manufacture of any taxable goods or in production of captive power and such manufactured goods are –
     • sold inside the State; or
     • sold in the course of inter-state trade or commerce; or
     • consigned outside the State otherwise than as a result of sale.
   • partial or full amount of input tax according to provisions under foregoing clauses, as may be applicable, in respect of purchase of taxable goods, purchased on or after the date of commencement of this Act, and
     • held in opening stock on the date on which dealer becomes liable to pay tax where such date falls after the date of the commencement of this Act, in the same form and condition in which such goods were purchased; or
     • used, consumed or utilized in manufacture, processing or packing of any taxable goods held in opening stock on the date on which dealer becomes liable to pay tax where such date falls after the date of the commencement of this Act; or
     • used, consumed or utilized in manufacture, processing or packing of any goods held in opening stock on the date on which dealer becomes liable to pay tax where such date falls after the date of the commencement of this Act, and where such manufactured, processed or packed goods are for sale in the course of the export of the goods out of the territory of India.

     Provided:

     • that in relation to purchase of foodgrains in pursuance of any order made under section 3 of the Essential Commodities Act, 1955 including any purchase in excess of levy share, by any dealer who makes purchases from the State Government or its purchasing agent, shall, in respect of such food grains, be entitled to claim input tax credit of an amount of tax payable by it on sale of such food grains or the amount of input tax in respect of such foodgrains, whichever is lower.
     • that no credit of input tax shall be allowed in respect of purchase of –
       1. Aviation Turbine Fuel, Diesel Oil and petrol; and
       2. goods required for use, consumption or utilization in manufacture, processing or packing of Aviation Turbine Fuel, Diesel Oil and petrol.
2. Credit of admissible amount of input tax credit computed on the basis of estimated sale, use, consumption or utilization of goods for various specified purposes, shall be claimed as under;
   • in respect of capital goods or captive power plant or both, as the case may be, partial amount of input tax to the extent it is in excess of four percent of turnover of purchase, in three successive yearly instalments of equal amount, first such instalment to be claimed in the return of the first tax period of the assessment year following the first assessment year during which capital goods or captive power plant or both, as the case may be, have been used for a full assessment year;
   • in respect of capital goods or captive power plant or both, as the case may be, out of the balance amount arrived at after deducting partial amount of input tax to the extent it is in excess of four percent of turnover of purchase of capital goods or capital power plant or both, as the case may be, from the total amount of input tax, in every first return of three successive assessment years following the assessment year in which for the first time such goods are used for full such assessment year, amount computed by using the formula:

     Amount of admissible input tax credit for any assessment year

            =    R´A ¸ 3 T

     Where:

     R is the amount of input tax arrived at after deducting the partial amount of input tax to the extent it is in excess of four percent of turnover from the total amount of input tax;

     A is the aggregate of-

     1. turnover of sales of manufactured taxable goods sold inside the State;
     2. turnover of sales of manufactured taxable goods sold in the course of inter-state trade or commerce; and
     3. turnover of sales of all manufactured goods sold in the course of the export of the goods out of the territory of India;

     T is the aggregate of –

     1. turnover of sales of all manufactured goods inside the State;
     2. turnover of sales of all manufactured goods in the course of inter-state trade or commerce;
     3. turnover of all manufactured goods in the course of the export of the goods out of the territory of India;
     4. value of manufactured goods consigned outside the State otherwise than as a result of sale; and
     5. value of manufactured goods disposed of in any other manner.
   • in respect of goods held in opening stock on the date of commencement of this Act, in six monthly instalments of equal amount and first such instalment shall be claimed in the tax period which starts after expiry of period of three months after the commencement of this Act;
   • in respect of goods held in opening stock on the date on which a dealer becomes liable to pay tax, in the return of the tax period in which the dealer becomes liable to pay tax;
   • in respect of goods held in closing stock on the last day of period of composition scheme under section 27, in the return of the tax period in which the day following the last day under the scheme falls; and
   • in all other cases in the return of the tax period in which goods have been purchased.
3. Where any goods purchased during a particular tax period or assessment year, whether wholly or partly, are to be –
   • sold in any manner or consigned outside the State otherwise than as a result of a sale;
   • used in manufacture, processing or packing of any goods and such manufactured, processed or packed goods are to be sold in any manner or consigned outside the State otherwise than as a result of a sale,

   in any tax period subsequent to such tax period or in an assessment year subsequent to such assessment year, as the case may be, for the purpose of computing input tax credit for such tax period or such assessment year, as the case may be, the estimation of extent to which purchased goods are to be utilized for various purposes shall be made in the prescribed manner and where actual extent differs from the estimated extent, amount of input tax credit for such tax period or assessment year, as the case may be, shall be recalculated on the basis of actual extent.

4. A dealer who claims partial or full amount of input tax credit in respect of any goods held in opening stock on the date of the commencement of this Act, shall submit inventory of such goods along with details of admissible amount of input tax credit within a period of thirty days from the commencement of this Act, to its assessing authority. The assessing authority shall examine the claim of the dealer and for this purpose the assessing authority may make any such enquiry as it considers necessary.
5. Except as prescribed, no input tax credit shall be allowed for purchase of any goods in respect of which a dealer does not possess original copy of tax invoice issued in the prescribed form and manner by the registered selling dealer and where purchasing dealer, himself is liable to pay tax on purchase of any goods, no input tax credit in respect of such goods shall be allowed unless the dealer proves that he has included amount of tax payable on such purchase of goods in the amount of tax payable by him.
6. No input tax credit shall be allowed for purchase of goods in respect of which dealer is liable to deduct amount of tax from the seller in accordance with provisions under clause (c) or clause (d) of sub-section (1) of section 34, unless the dealer proves that after deduction, the amount of tax has been deposited in the prescribed manner.
7. No input tax credit shall be allowed against a Tax Invoice obtained without making actual purchase of goods shown in such Tax Invoice.
8. Where any goods are sold by a principal through a selling agent, input tax credit in respect of purchase of such goods shall be claimed by the principal.
9. Input tax credit shall be allowed in respect of only those goods which are purchased from within the State.
10. In case of a dealer who, under section 27, opts for any scheme of payment of lump sum in lieu of tax due on turnover of sale or purchase or both, as the case may be, input tax credit shall not be allowed in respect of purchase of goods -
    1. sold or disposed of otherwise in the same form and condition in which those goods were purchased; or
    2. used, consumed or utilised in manufacture, processing or packing of any goods sold or disposed of otherwise, during the period of composition scheme under section 27; or
    3. held in opening stock on the date of commencement of the period of scheme, in the same condition in which those goods were purchased; or
    4. which have been used, consumed or utilised in manufacture, processing or packing of any goods held in opening stock on the date of commencement of the period of scheme.

    Explanation: For the purpose of this section –

    • input tax does not include amount of special additional tax leviable under section 5;
    • resale of any goods does not include resale of such goods either by way of transfer of property in goods involved in the execution of a works contract or by way of transfer of right to use such goods.
    • Where during the process of manufacture of any taxable goods any goods exempt from tax under clause (a) of section 11 are produced as byproduct, it shall be deemed that purchased goods have been used in manufacture of taxable goods.
    • Goods required for use in manufacture of any goods or for use in production of captive power do not include a motor vehicle or parts, components and accessories of a motor vehicle or any goods required for running or maintenance of a motor vehicle.