How do I calculate Input Tax credit on purchases against which partial credit is available?
A. If you are using the second method as explained in the last question, you can avail input tax credit of all purchases of input that you credit into the inventory for use in manufacture of taxable goods while all the purchases of inputs that are credited to the inventory for use in manufacture of exempted goods, shall not be entitled for input tax credit. If you are using the first method, at the end of each quarter, the input tax charged on purchases for which partial credit is available, is to be proportionately divided using the following formula : Credit Allowed = I * T/(T+E) I : Input tax charged on purchases, for which partial credit is available, made during the quarter. T : Total sales of taxable manufactured goods made during the quarter and zero rated sales. E : Total sales of exempt manufactured made during the quarter + revenues from outputs not available under VAT system. Finally, at the time of filing the last quarter return, you are required to perform the same calcula
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Related Questions
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