10. Input tax credit

(1) The input tax credit that can be deducted from the output tax payable for any month or year shall be calculated by using the formula (A + B) - (C + D)

Where,

              A = Input tax credit carried forward from the previous month or year

              B = Input tax credit accrued during the month or year

              C = Input tax credit reversed during the month or year

              D = Input tax credit refunded during the month or year

 (2) Every registered dealer who claims input tax credit under sub-section (1) of section 19 shall, produce the original tax invoice, in support of his claim of the input tax credit, containing the following details, namely:-

(a) A consecutive serial number;

(b) The date on which the invoice is issued;

 (c) The name, address and the Taxpayer Identification Number of the seller;

 (d) The name, address and the Taxpayer Identification Number of the buyer;

(e) The description of the goods;

 (f) The quantity or volume of the goods;

 (g) The value of the goods;

 (h) The rate and amount of tax charged; and

(i) The total value of the goods.

*[“(2-A) Every registered dealer who claims input tax credit to the extent of the tax paid on purchases of taxable goods specified in the First Schedule to the Act from the other registered dealers inside the State, shall establish,

whenever it is deemed necessary by the assessing authority, that the tax due on such purchase of goods has actually been remitted into the Government account.

(2-B) For the removal of doubts, it is hereby declared that, in no case, the amount of set-off or refund on any purchase of goods shall exceed the amount of tax in respect of the same goods, actually paid, if any, under the Act

or any other Act referred to in section 88 of the Act, into the Government treasury except to the extent where purchase tax is payable by the claimant dealer on the purchase of the said goods effected by him.”;]*

 (3) (a) Every registered dealer, other than those who opt to pay tax under sub-section (4) of section 3 or section 6 or section 8, who claims input tax credit for other than capital goods purchased on or after 1st January 2006 held in stock on the commencement of the Act, shall submit a stock inventory statement in Form V in duplicate along with photostat copy of related purchase invoice or bill within thirty days from the date of commencement of the Act.

(b) In the case of claim of input tax credit for other than capital goods purchased on or after 1st January 2006, held in stock on the commencement of the Act ,--

 (i) Where the purchase has been effected from first seller in the State with invoice or bill showing the tax separately, the claim for input tax credit shall be allowed to the extent of the tax paid by him on the value of such goods;

 (ii) Where the purchases have been effected from second and subsequent dealer, the claim for input tax credit shall be restricted to the extent of the tax calculated on the purchase value of goods after deducting fifteen per cent and by using the tax fraction formula at the rate specified in the relevant Schedule under the said 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.

(iii) If the goods taxable under the Tamil Nadu General Sales Tax Act, 1959 are exempted under the Act, no input tax credit shall be allowed;

(iv) Where any tax is paid on any goods at the point of purchase by the dealer himself, such tax shall be eligible for claiming input tax credit;

(v) Every registered dealer shall avail the input tax credit immediately after the submission of stock inventory statement in From V by him. Such claim shall be availed within six months from the date of commencement of the Act. The unavailed input tax credit, if any, after six months shall lapse to Government.

 (vi) The assessing authority shall verify the claim made by the registered dealer with reference to documents filed along with the stock inventory in From V and pass an order *[not later than seven months, from the date of commencement of the Act], determining the amount for which the registered dealer is entitled to input tax credit and reverse the claim, wherever necessary.

(vii) A registered dealer, who effects zero rated sale shall not be entitled for input tax credit relating to the stock held on the date of commencement of the Act. (viii) The registered dealer shall ordinarily keep all original purchase invoices and connected documents relating to the claim for input tax credit under this rule, for a period of five years from the date of commencement of the Act and shall produce such documents to the authority for scrutiny, if required.

(4) (a) The registered dealer who claims input tax credit on capital goods under clause (b) of sub-section (3) of section 19, shall within thirty days from date of commencement of commercial production intimate the said date to the assessing authority under whose jurisdiction his principal place of business is situated.

 (b) In respect of capital goods purchased within the State, the registered dealer shall be entitled to avail up to fifty per cent of the input tax credit in the same financial year and the balance of the input tax credit before the end of the third financial year, provided the said capital goods are in possession of the dealer. After the expiry of the third financial year, the un availed input tax credit, if any, shall lapse to Government: Provided that a registered dealer who makes purchase of parts and accessories for capital goods already purchased and use in manufacture of taxable goods is entitled to input tax credit relating to such goods in the month of purchase or thereafter.

 (c) The registered dealer shall not be entitled to claim input tax credit on the capital goods purchased prior to the commencement of the Act.

(d) A registered dealer who manufactures goods, the sales of which are exempted under Section 15 of the Act is not entitled to input tax credit.

Total sales turnover of taxable goods, zero rated sales and sales of exempted goods.]

 (5) Every claim made under clause (b) of sub-section (10) of section 19 shall be presented before the assessing authority within thirty days from the date on which the original tax invoice is lost. It shall be accompanied by a duplicate or carbon copy of the original invoice. The assessing authority shall verify such claim and pass orders allowing input tax credit on the basis of duplicate or carbon copy of the original invoice or its rejection. When the claim is rejected, the assessing authority shall record his reasons for doing so and communicate to the dealer:

 Provided that no order prejudicial to the dealer shall be passed unless the said dealer is given an opportunity of being heard.

 (6) (a) After availing input tax credit, if any, dealer who purchases goods returns the goods and gets credited the price and tax paid, the tax credit so availed shall be reversed, only when-

(i) the purchase was included in the return; and

(ii) the goods were returned within a period of six months from the date of purchase by him.

(b) Where a dealer who sells goods after paying tax, receives back his goods, he may deduct such tax amounts paid from the tax payable in the returns of following months only when, -

(i) in respect of sales return, -

(A) the sale was included in the return and the tax paid;

 (B) the goods were received back or returned within a period of six months from the date of sale;

 (C) the price of the goods and the tax, if any, charged thereon were refunded in full to the buyer; and

(D) the credit note shall contain the date and serial number of the invoice on which the tax was originally charged and brought to account.

(ii) in respect of un fructified sale,-

 (A) the sale was included in the return and tax paid; and

(B) the goods were received back within a period of thirty days from the date of sale.

(C) Wherever any credit notes are to be issued for discount or sales incentives by any dealer to another dealer after issuing tax invoice, the selling dealer shall pass a credit note without disturbing the tax component on the price in the original tax invoice, so as to retain the quantum of input tax credit already claimed by the buying dealers as well as not to disturb the tax already paid by the selling dealer.

 (7)(a) The principal is entitled for the input tax credit corresponding to the goods which are transferred to the agent and sold by the agent on behalf of him and such input tax credit is adjustable to any liability of the principal.

(b) The principal is entitled for the input tax credit for those purchases effected by the agent on behalf of him with principal’s Taxpayer Identification Number and on such purchases, the agent cannot claim input tax credit.

(c) The agent is not liable to pay tax on the sale of those goods which were received by him from the principal.

(8) (a) The transferee claiming input tax credit under sub-section (14) of section 19 shall furnish the following details, namely:-

 (i) Un availed credit available in the account of the transferor as certified by a Chartered Accountant or Cost Accountant;

 (ii) Inventory of stock transferred with date;

(iii) Details of capital goods transferred; and

(iv) Original tax invoices evidencing the payment of tax at the time of purchase.

(b) The assessing authority shall verify the correctness of the details furnished under clause (a), allow or determine the amount of input tax credit transferred to the dealer or reject the claim:

 Provided that no order rejecting the claim shall be passed unless the dealer is given an opportunity of being heard.

(9) (***)Omitted

(b) Input tax credit on transfer of goods falling under section 6-A of the Central Sales Tax Act, 1956 shall be allowed only if Form F prescribed in the Central Sales Tax (Registration and Turnover) Rules, 1957 is filed.

 (10) (a) In cases where the input tax paid in the month exceeds the output tax payable, the excess input credit shall be carried over to the next month.

(b) In cases where the input tax credit as determined by the assessing authority for any registered dealer, for a year, exceeds the tax liability for that year, it may adjust the excess input tax credit against any arrears of tax or any other amount due from him If there are no arrears under the Act or after the adjustment there is still an excess of input tax credit, the assessing authority shall serve a notice in Form P upon such dealer.

 (11) The method of selection by the Commissioner referred to in sub-section (3) of section 22 shall be based on suitable stratified random sampling method and such selection shall not exceed twenty per cent of the cases assessed under sub-section (2) of section 22 and intimate the details of such selection to the assessing authority for detailed scrutiny of accounts. Such list shall be exhibited on the Notice Board of the assessment circles and also in the website of the department. The assessing authority shall call for the accounts of those assessees for detailed scrutiny and pass appropriate orders.