Question19:
In form TRAN-1, at Sl.no. 5 c There is a column 2 i.e. Balance of ITC of VAT and ( entry tax) in last return.
Accordingly we need to feed the value of ITC to be carried forward in last return of VAT i.e. JUNE 2017. In this connection we would like to let you know that this ITC value do not show exact value of ITC as this value is value continuously being carried forward from previous returns whereas while final assessment, which generally takes two three year , this ITC reduced by authority. So there is gap in reported ITC in return and assessed ITC.
for illustration :
financial year ITC claimed in return ITC assessed by Authority
2014-15 1000 800 in the year 16-17
2015-16 1000+1000 = 2000
2016-17 2000+1000+ 3000
June 17-18 3000 + 1000=4000
Now as per return you have to fill 4000 as ITC whereas it is actual 3800 and further may go down on assessment of subsequent year. Please let us know to how to report in such situation.
Answer:
You have ITC in your account but this may reduced after assessment The decision should be taken on the basis of available ITC VS required ITC (some time you have lot of ITC but you don't need it ) The transitional rules permits you to take credit of the closing balance with condition that in future if there is any difference on account of assessment ,demand etc then the refund will be given in cash and if there is any demand then it will have to be deposited in cash. Now as Management decision should be if you are sure that some amount will be disallowed on account of closing stock or non issue of sales tax form etc then it is better to reduce the ITC to the extent the demand is expected further if your money is extra in ITC and you are doubtful about some demand then deposit it because when you will win the case the amount will be refunded in cash this way you will convert credit into cash. The relevant provision are given in Section 142(8) please go through it and take decision keeping in mind tax planning point. (Reply Dt. 20/12/2017)