Claim of input vat generated by purchase of capital assets

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

25 January 2015 Hi all,

I have a doubt regarding VAT input credit claim.

"X" Ltd a Private Corporate Hospital, which is in to the business of providing Health care services to the publick has purchased Capital assets which assets will be used for doing the surgeries during the course of time. On these capital asset purchases it has paid huge amount of VAT which is considered as Input VAT while filing the VAT returns and the asset is capitalised excluding VAT portion while calculating the depreciation and so on...

My query is, is the INPUT VAT which is taken and claimed in VAT return, against the output VAT payable on the sale of medicines to the patients is correct or not? If not, what will be the consequences if the period for filing the revised return is completed.

Please answer the query by considering the Andhra Pradesh (Undivided), VAT rules.

Waiting for your opinion..

Prakash Kochar

Prakash Kochar (Expert)
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03 February 2015 Input VAT credit against capital assets is not allowable against vat out put for sale of medicine. Capital asset purchased is not related to business registered under VAT Act.
Return may be revised and show correct liability to avoid penalty, though time has lapsed for revising.

Querist : Anonymous

Querist : Anonymous (Querist)

03 February 2015 Thank you Dear Mr.Prakash..

Why can not the Capital asset purchased is related to business! it is.. Because, the asset purchased was being put to use for treating the patients from the very first day.

The worry in revising the return is, if we go to the department with this issue, they will first try to impose penalty, and then interest, and then some under the table amount..

Also, why is this was not pointedout by the statutory auditors, which they should do for the client while doing the statutory audit of the year..

Please shwo some practical and smooth solution.

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