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How input credit has to be reversed where the dealer has made inter state sales/transfer?

The Tamilnadu Government has made few important amendments in TNVAT Act with regard to reversal of Input Tax Credits in respect of Inter-state sales and Stock Transfers outside the State. These amendments were carried out by enacting a Tamilnadu VAT (Fifth Amendment) Act, 2013 (Amendment Act) on 8th November 2013. The effective date for these amendments is 11th November 2013. The effect of these amendments are as follows :- S.No. Nature of transaction Position upto 11th Nov,2013 Position after 11th Nov,2013 1. Inter-state sales against C Form (Chargeable to tax @ 2% at present) No reversal of ITC Required Input Tax Credit allowed in excess of 3% of Tax 2. Stock Transfers outside the state (ie) Transfer outside the state otherwise than by sales. ITC allowed in excess of 3% ITC allowed in excess of 5% of tax.

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