MEGHA JINDAL (Student CA Final ) (31 Points)
03 July 2014A company purchased an asset and paid freight on it. It also paid reverse charge on such service. It does not claim credit for service tax paid under reverse charge. it . It capitalised this freight inward . Should it capitalise reverse charge also ? what if the amt of reverse charge is only Rs 1000 ????
praveen
(Chartered Accountant)
(6971 Points)
Replied 03 July 2014
RADHIKA JALAN
(agarwal)
(1521 Points)
Replied 03 July 2014
VIKASH KUMAR JAIN
(Audit Executive)
(711 Points)
Replied 03 July 2014
S.GANESAN
(AUDIT MANAGER)
(110 Points)
Replied 04 July 2014
Yes. Whatever COST incurred to bring the Machinery into the Factory r Present Location it should be capitalized. Since you have not taken ST credit, the ST paid on Freight(GTA) under RCM also should be capitalized.
akanksha
(student)
(39 Points)
Replied 11 October 2014
As per the standard, all the cost incurred to make the asset ready for its intended use should be capitalised and any duties, taxes etc which are not refundable should form part of the asset. Since in this case, the service tax credit is not being claimed, the same should form part of cost i.e. capitalised and also the freight inwards which was incurred to bring the asset to the desired location should be capitalised.
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