Sales of goods made to units in special economic zones would be eligible for refund of Value Added Tax, Mr G. Shanmugam, Joint Commissioner (Commercial Taxes) of VAT Cell,Government of Tamil Nadu, clarified on Saturday.

In an interactive session on VAT organised here by the Rotary Club of Esplanade, Mr Shanmugam said that when a unit in Tamil Nadu sells goods in other States, the unit would be entitled to input tax credit of all but 4 per cent of the input tax paid. For example, if a company buys a product that had suffered a 12.5 per cent tax and sells it in Andhra Pradesh, the company could claim an input tax credit of 8.5 per cent. The State Government would retain 4 per cent tax, he said.

Eligibility

Same for inter-state stock transfers, provided they are done with the C forms, the Joint Commissioner said

Answering a barrage of questions, Mr Shanmugam stressed that the cardinal principle behind VAT was `tax paid on purchase is deductible from tax payable on sales'.