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input VAT on capital goods

rama krishna (employee) (35 Points)

10 January 2009

can input VAT can be claimed on capital good. can anybody plz advice......

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18 Replies

CA. Rajeev Aggarwal (Chartered Accountant) (3419 Points)
Replied 10 January 2009

Yes, but in 3 years

1/3 every year

CA Hemant T Dewani (Chartered Accountant) (3356 Points)
Replied 10 January 2009

input of vat taken immediatly if capital goods is used for trading of manufacturing unit it is not cover under rule 54 fo the mvat act

Koneri Balaji (CHARTERED ACCOUNTANT) (120 Points)
Replied 10 January 2009

Yes you can take input credit of capital goods but it should not fall under the negative list i.e. Schedule V

CA SUDHIR HALAKHANDI (PRACTICING CHARTERED ACCOUNTANT) (13196 Points)
Replied 11 January 2009

DEAR MEMBERS,

I HAVE WRITEEN ON THIS FORUM SO MANY TIMES THAT VAT IS A STATE SUBJECT HENCE THE QUESTION ON THE VAT CAN NOT BE ANSWERED AS THE QUESTIONS OF INCOME TAX AND SERVICE TAX ARE ANSWERED.

LET US WE DEAL THIS QUESTION IN A PROFESSIONAL MANNER.

WHAT IS INPUT CREDIT ON CAPITAL GOODS:-

NOW FIRST OF ALL WE HAVE HAVE TO SEE WHAT IS CAPITAL GOODS? EACH LAW OF STATE HAS DEFINED IT IN IT'S OWN MANNER BUT THE MOST USED OF COMMON DEFINITION IS :-

"CAPITAL GOODS MEANS PLANT AND MACHINERY , PARTS AND ACCESSORIES THEREOF WHICH HAVE BEEN USED FOR MANUFACTURING OF GOODS."

WHAT IS INPUT CREDIT ON CAPITAL GOODS:-

THE VAT PAID WITHIN THE STATE IS THE INPUT CREDIT ON CAPITAL GOODS.

SEE HERE IN LOST OF THE STATES THE INPUT CREIDT ON CAPITAL GOODS IS AVIALABLE ON PLANT AND MACHINERY AND ACCESSORIES AND PARTS THEREOF HENCE YOU CAN BE SURE THAT "TRADERS" CAN NOT CLAIM THIS CREDIT.

TIME OF CLAIMING CREDIT:- HERE SEE THE CREDIT CAN ONLY BE CLAIMED AS PER VAT STATE LAWS. SEE SOME OF THE STATES HAVE MADE THE LAW TO GIVE IMMEDIATE CREDIT BUT IN MOST OF THE STATES THERE ARE RESTRICTIONS OF VARIOUS TYPES . SEE SOME OF EXMAPLES:-

1. THE CREDIT FOR CAPITAL GOODS HAVING VALUE UP TO RS. 1 LAKH CAN BE CLAIMED IMMEDITALY.

2. FOR CREDIT FOR MORE THAN RS.ONE LAC BILL CAN BE CLIAMED IN TWO INSTALLMENTS - FIRST IN SEPT AND SECOND IN MARCH.

3. THE INPUT CREDIT ON CAPITAL GOODS CAN BE CLAIMED IN 12 INSTALMETS MONTHLY.

HENCE GO FOR PARTICULAR STATE LAW AND DECIDE THE FATE OF INPUT CREDIT ON CAPITAL GOODS.

MY SUGGESTIONS TO VAT QUESRIES:-

1. SHOULD INFORM THIER STATE.

2. PLEASE CLARIFY THE PROBLEM IN BRIEF .

MY SUGGESTTIONS TO MEMBERS WHO ARE REPLYING:-

1. IF THE PROBLEM IS NOT OF YOUR STATE PLEASE DON'T TOUCH IT

2. ONLY THE CA/EXPERS WORKING IN THAT STATE SHOULD COME FORWARD AND TACKLE THE PROBLE.

(THE AUTHOR OF THIS REPLY IS A VAT EXPERS FROM RAJASTHAN HAVING WRITTEN A BOOKS ON VAT IN HIS OWN STATE AND CAN ANSWER GENERAL QUESTIONS ON VAT PLUS SPECFIC QUESTION ON VAT IN RAJASTHAN.

FURTHER THE AUTHOR HAS ALSO WIRTTEN ABOUT VAT IN THE FOLLOWING STATES :- DELHI, MAHARASTRA, KARNATAKA AND WEST BENGAL- IN CHARTERED ACCOUNTANTS PRACTICE JOUNAL, DELHI- VAT SPECIAL 2005 ALSO WRITTEN IN ICAI CA JOURNAL -VAT SPECIAL IN 2005 WHEN VAT WAS INTRODUCED IN COUNTRY.)

- MY SPECIAL REQUEST TO ALL THE MEMBERS:-

2 MARKS IS REPLY KE LIYE KAM RAHENGE , PLEASE REQUEST THE ADMIN TO GIVE ME AT LEAST 25 MARKS FOR THIS REPLY.

ALL THE CONCERNED SHOULD NOT TAKE THIS REPLY AS AN OFFENCE AND READ AND ACT IN TRUE SPIRIT AND SENTIMENTS IN WHICH THE REPLY IS GIVEN.

- CA SUDHIR HALAKHANDI

6 Like

Shudhanshu Agrawal (Business) (2570 Points)
Replied 11 January 2009

I agree with Mr.Sudhir....please do mention the state for which u are asking this question .......but this question is different and in this VAT credit can we taken on capital goods...but i think no of years are 2 in case of VAT and 3 in case of excise in which credit can be taken

Do correct me if i am wrong.

CA SUDHIR HALAKHANDI (PRACTICING CHARTERED ACCOUNTANT) (13196 Points)
Replied 12 January 2009

Dear Shudhanshu ! Still you are mistaking . All the state VAT laws have different provisions regarding this. Here in Rajasthan it has to be taken in One year . In Maharashtra ... Hence you have to go to the state Law of a particular state. For central excise you may be right becasue i am not an expert of this subject. - Goods wishes and thanks for showing interest.

2 Like

Ameet (L) (1678 Points)
Replied 12 January 2009

In my opinion, Mr. Shudhanshu in excise there is 2 Yrs. & i clearly agree with Mr. Sudhir

1 Like

VIPIN KUTUMBALE (TAX CONSULTANT) (409 Points)
Replied 29 January 2009

Originally posted by :Ameet

under excise, first of all we have to see whether the capital goods is elligible for CENVAT OR not, as per the CENVAT RULE every fixed asset is not elligible for CREDIT UNDER CENVAT, and the cenvat should be used 50% in the financial year in which capital goods entered in the factory/ procured by the output service provider, and remaining 50 %in the next year , at the same time , assessee should not claimed depreciation on this amount under Income act

In my opinion, Mr. Shudhanshu in excise there is 2 Yrs. & i clearly agree with Mr. Sudhir

1 Like

kailash (Accounts Manager ) (27 Points)
Replied 25 August 2009

i clearly agree with Mr. Sudhir

Jitender (Ac) (25 Points)
Replied 24 December 2009

can anyone tell me about.... INPUT CREDIT AVAILABLE ON CAPITAL GOODS??

i JUST WANNA KNW is there any limit of amount on capital goods for availing input VAT credit under DVAT..

plz help......

sanjeev (accountent) (21 Points)
Replied 28 June 2012

dear sir,

mujhe ye batyien ki mfg. co. me Oil Lub. k bill par input claim le sakte hai

regards

GUDLA SAI PRASAD (executive finance) (64 Points)
Replied 05 June 2013

is it possible to claim total input vat on capital goods in one year.

DEVENDRA SARAF (Deputy Manager) (21 Points)
Replied 20 January 2014

In a project, there is a huge time lag between Purchase and it's Cpitalisation in books of accounts. How the same need to be shown in the Quarterly VAT returns in the state of West Bengal.

jeetendra (proprietor) (23 Points)
Replied 07 February 2014

Sir, I have a mfg.unit in gujarat of DM water and I have purchase Machinery for that Can I take credit on VAT as per Gujarat VAT act please suggest me for full VAT I can take credit or part how ?

Jeetu Patel