Section 21(4) in The Police Enhanced Penalties Ordinance, 2005
(4)Input Tax credit shall be allowed for purchase of goods made within the State from a registered dealer holding a valid certificate of registration and which are intended for the purpose of -(a)sale or resale by him in the State;(b)use as raw material or as capital goods in the manufacturing and processing of goods other than those exempt from tax under the Act intended for sale in the State ;(c)sale in the course of inter-state trade and commerce;(d)sale in the course of export out of the territory of India; or(e)for use as containers for packing of goods other than those exempt from tax under the Act for sale or resale in the State:Provided that in respect of transactions falling under clause (c) input tax credit may be allowed on the tax paid in excess of 4% on the raw materials used directly in the manufacture of the finished products:Provided further that if purchases are used partially for the purposes specified in this sub -section, input tax credit shall be allowed proportionate to the extent they are used for the purposes specified in this sub- section:Provided also that partial rebating shall be allowed where inputs are used in the following circumstances:(i)sales consisting of both taxable and exempted goods;(ii)sales consisting of sale and dispatches in the form of consignment and stock transfer to other States; and(iii)inputs are used for any other purpose in addition to use in the course of business.
