(1) Where a dealer effects sales of goods both, subject to tax and exempt from tax, under the Act, the following calculation for claiming input tax credit shall apply -
(a) where all the sales effected by a dealer in a tax period are subject to tax under the Act, the whole of the input tax may be claimed as credit.
(b) where all the sales effected by the dealer for a tax period are exempt from tax under the Act, no input tax may be claimed as credit.
(c) where a part of the sales effected by a dealer in a tax period are subject to tax and the remaining part of the sale are exempt from tax under the Act, the amount that can be claimed as input tax credit shall be calculated from the following formula:
Where "P" is the total amount of input tax;
"Q" is the taxable turnover of sales including zero- rated sales: and
"R" is the total amount of all sales including exempt sales:
during that tax period.
(d) where the fraction Q/R, is less than 0.05, the dealer may not claim any input tax credit for that period.
(e) where the fraction Q/R is more than 0.95, the dealer may claim the entire input tax as credit for that period.
(2) Subject to the conditions prescribed in sub section (5) of section 20 input tax credit on capital goods shall be allowed in the following manner:
(a) in case of a continuing business, the admissible input tax credit on purchase of capital goods during a tax period shall be credited in full during that tax period; and
(b) in case of a start up or new business, admissible input tax credit on purchase of capital goods during a tax period shall be allowed to be credited in the tax period in which commercial sale commences; and input tax on capital goods purchased after commencement of commercial sale of the goods produced shall be allowed credit as per provisions made in clause (a).
(c) Where there is sale of both taxable and tax exempt finished products admissible input tax credit, shall be determined on application of the principles as provided under sub-rule (1) in respect of each tax period.
(d) The balance admissible input tax on account of purchase of capital goods remaining unadjusted till the tax period shall be credited in the first tax period after the OVAT (Amendment) Rules 2009 come into force.
(3)(a) where a dealer effects sale of goods in the course of interstate trade and commerce, the creditable input tax shall be calculated limiting the same to the extent of CST payable under the CST Act 1956 as provided in clause (d) of the proviso to sub section (3) of Section 20 of the Act.
(b) in case of sale of goods in any tax period in the manner referred to in clause (a) above, the registered dealer making such sales, while filing return under the Act for the tax period, shall furnish the particulars of such sales and the corresponding purchases of goods made from the registered dealers inside the state in Annexure-II of Form VAT-201.
(c) In case, the sale of goods in the manner referred to clause (a) above, results in CST payable less than the corresponding input tax on the corresponding purchase of goods, the input tax creditable for the tax period shall be reversed by the amount calculated in the box provided in serial No.5 of Annexure-II in the Return.
(d) In case the CST payable is equal to or more than the corresponding input tax as calculated as per provisions of clause (c), there shall be no reversal of Input Tax Credit.
(e) In case of sale of goods in the manner referred to in clause (a) above during the period commencing from 1st of June 2008 till the month in which sub-rule (3) comes in to force, the registered dealer making such sales, while filing return under the Act for the tax period in which sub-rule (3) comes into force, shall furnish the required information in Annexure-II-A of Form VAT-201.
(f) In case, the sale of goods in the manner referred to clause (a) above during the tax periods referred to in clause (e) above, results in CST payable less than the corresponding input tax on the corresponding purchase of goods, the input tax creditable for the tax period shall be reversed by the amount as calculated in Annexure-II-A of Form VAT-201.
(4) Input Tax Credit on stock of goods held, (i) on the date of Registration as admissible under sub-section (11) of Section 20 and (ii) on the date of assignment of TIN to a registered dealer liable to pay tax u/s 11 in lieu of tax payable u/s 16, shall be calculated and availed in the manner prescribed as under:
(a) The claim of credit of input tax shall be the tax paid on purchases, duly supported by retail invoices, made from a dealer(s) registered under this Act inside the State within 3 months prior to the date of registration or the date on which TIN is assigned in lieu of SRIN and held in stock on the date of registration or on the date a dealer is assigned with TIN in lieu of SRIN.
(b) Every dealer granted registration under rule 18 and assigned with TIN and such dealers who are assigned with TIN in lieu of SRIN u/r 27 shall, within 15 days from the date of grant of registration, apply to the assessing authority in Form VAT-607-A along with an inventory showing the quantity and value of goods held in stock as on the date of registration.
(c) The Assessing Authorities shall verify and allow the claim of credit as found admissible.
(d) When the claim of credit preferred by a registered dealer is accepted by the assessing authority he shall be communicated in Form VAT-608-A, the amount of claim allowed and the tax period in which it shall be availed.
(e) The Input Tax allowed shall be adjusted against Output tax payable.
Provided that no credit under this rule shall be allowed to a registered dealer liable to pay turnover tax under clause (b) of section 9.