VAT's the big idea? Now, carry forward input tax credit

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VAT's the big idea? Now, carry forward input tax credit

Sunday, 08 March 2015 | Staff Reporter | New Delhi

VAT's the big idea? Now, carry forward input tax credit

Input tax credit that was being collected from big traders and businessmen in the city can now be collected in the next financial year as well. In fact, this will remove the pressure on traders and businessmen to collect the refund paid to the VAT Department in the same financial year. In a bid to simplify norms regarding trade and taxes, the Arvind Kejriwal Government on Saturday assured trader associations that carry forward of input tax credit of VAT will be allowed. Deputy Chief Minister Manish Sisodia on Saturday held a meeting with traders associations and businessmen and assured that input tax credit will also be allowed to carry forward in the next financial year.

The final decision to this effect will be taken by Delhi Cabinet. VAT Commissioner Sanjiv Khirwar has been directed to bring a Cabinet proposal to this effect so that the Government can take a decision in this regard as it needs to amend VAT rules. As per existing VAT norms, it is mandatory for traders to claim refund before March 31, which is a cumbersome process. This means a trader can carry forward the excess tax credit in the same year. The trader has to claim refund of such excess tax credit in his return for the last quarter of that year. The traders perceive that this restriction curtails their freedom to carry forward the excess tax paid. Since this amendment was carried out in September 2013, a number of traders have claimed refund during the last quarter of 2013-2014.

Secondly, due to this restriction many wholesalers would not be able to sell the excess stock to retailers towards the end of the financial year as retailers would not be eligible to carry forward the tax credit to the next financial year and hence, they have to claim the refund. Therefore, the department proposes to allow traders to carry forward the excess tax credit to the next year to adjust the output tax liability in the next tax period.

The Arvind Kejriwal Government has also decided to extend the date for submission of all forms from March 31 to June 30. This means, traders have been given more time to submit their details by June 30 instead of March 31. Earlier this was in form R-10; it was later amended to R-9. Many dealers had already furnished R-10 and were required to furnish R-9 again. later the department changed its stand and allowed the dealers who had already furnished R-10, to skip re-entry in R-9. The continuous change in forms has created a confusing state amongst the traders. The R-9 is to comply with all the years and details of statutory forms so available are required to be furnished. The data entry requires vast details of the forms. Also many traders are not tech-savvy. In order to have effective compliance, it is suggested that the due date be extended to June 30.

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