Punjab Deputy Chief Minister Sukhbir Singh Badal on Tuesday ordered the withdrawal of the amendment made in the first provision of the Punjab (Value Added Tax) VAT Act, 2005, for availing input tax credit and asked the excise and taxation department to draft an Ordinance in this regard and present it for approval in the next meeting of the state cabinet.

Input tax credit (ITC) is a concession granted by the state government against the output tax liability on the sale or purchase of goods within the state jurisdiction. During October 2013, the state cabinet had given its nod to amend section 13 (1) of the Punjab VAT Act and this amended provision was also passed by the Punjab Assembly in this budget session.

The new amendment enshrines that ITC would not be available unless such goods were sold or used in the manufacturing or processing of goods meant for sale in the state.

Disclosing this, an official spokesman of the deputy chief minister's office said trader's associations had met him recently and apprised him of some suggestions in the said VAT act to check evasion of ITC.

Keeping this in view Badal, who is also heading the excise and taxation portfolio, has asked the department to extend the date of filing returns till August 20 and provide options to traders for filing their returns as per previous practice.

"To redress the grievances of trader's community the state government will amend clause 13 (1) of the Punjab VAT Act by an ordinance," he added.