Course Code - BVZ6A
Course Name- INCOME TAX
question 2: provide an explanation for tax credit provision. answer: Tax credit provision If valuable income Tax has been paid in a single specific country as input tax and output tax is to be paid in some other country, tax credit score shall now not be allowed for such input tax e.g. A registered dealer of Delhi Mr. D has purchased sure goods from Punjab for '1,00,000 and paid imperative income Tax to the Punjab government '2,000 @ 2% and finally the equal goods had been offered in Delhi for '1,50,000 and has charged neighborhood sales tax @ 12.5% amounting to '18,750, in this case CST credit of `2,000 shall no longer be allowed and whole quantity of '18,750 will be paid to the Delhi government. If the supplier has purchased goods from Delhi and has offered the products in U.P. and has accrued important sales Tax from the purchaser in U.P., in this situation such CST needs to be paid to Delhi government as a result VAT credit for enter tax paid in Delhi shall be allowed. e.g. Mr. X is a dealer in Delhi and he has bought items for 'five,00,000 plus VAT @ 10% and items for sold underneath inter-nation sale for '7,00,000 plus CsT @ 10% in this case tax remedy will be as given below: fee of goods purchased five,00,000 upload: VAT @ 10% 50,000 Tax credit score allowed 50,000 value + earnings 7,00,000 Output CST @ 10% 70,000 net Tax Payable (70,000 - 50,000) 20,000