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vat on capital goods

VAT (Legacy) 1154 views 1 replies

What is the procedure of claiming input credit in case of purchasing capital goods?

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Input Tax Credit in  case of Capital Goods Purchased

In India 32 states implemented VAT (Value Added Tax) and all the 32 states have their own VAT Act, Rules.

My personal experience says that Different states have different Provisions for claiming Input VAT Credit on Capital Goods Purchased.

  • Some of the states allow full amount of the Input VAT paid on Capital goods in the same month/quarter as the case may be.
  • Some states have ceiling i.e.  Input VAT paid on capital goods costing Rs. 1,00,000 will be allowed in the same month/quarter of the purchase and if Input VAT paid on Capital goods costing more than Rs. 1,00,000 will be allowed in 36 Installments.
  • Some states have provision like 30% of Input VAT will be claimed in first year,  40% in second year and rest of the Input VAT in third year.

Note: The provision stated above are very generic. It is advised to refer the respective state VAT rules for more calrity.


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