Reduction on vat
This query is : Resolved
11 April 2014
what % and name FA purchased for vat reduction taken.
11 April 2014
Please elaborate the term FA.....mjk
20 July 2025
Your query appears a bit unclear, but here’s what I can interpret and clarify:
🔍 Understanding Your Query:
You're likely asking:
"What is the % rate and name of Fixed Assets (FA) that can be purchased for claiming VAT reduction (input credit or set-off)?"
📌 Key Points:
VAT Reduction/Set-off on Fixed Assets (FA):
Under State VAT laws (like MVAT in Maharashtra or KVAT in Karnataka), input tax credit (ITC) on capital goods (i.e., fixed assets) is generally allowed but with conditions.
The rate of ITC and eligibility vary by:
State VAT Act
Type of FA (e.g., machinery vs furniture)
Usage (used in manufacturing or taxable sales)
✅ General Guidelines (under MVAT as example):
Type of FA Eligibility VAT Set-off
Plant & Machinery used in manufacture Yes Full ITC (or phased over 3 years)
Office Equipment/Furniture Often not eligible No or partial ITC
Vehicles Usually not eligible No ITC
📉 Reduced Set-Off under MVAT Rule 53 (if applicable):
If VAT paid on capital goods used partially for exempt or non-taxable goods/services, set-off may be reduced by 3% to 4% of the purchase price.
This is called reduction in set-off.
📋 Documentation/Declaration:
You must mention asset type and % claimed in your VAT returns and audit report (Form 704).
Keep invoices clearly mentioning:
TIN of seller
VAT charged
Description of FA
🔍 Understanding Your Query:
You're likely asking:
"What is the % rate and name of Fixed Assets (FA) that can be purchased for claiming VAT reduction (input credit or set-off)?"
📌 Key Points:
VAT Reduction/Set-off on Fixed Assets (FA):
Under State VAT laws (like MVAT in Maharashtra or KVAT in Karnataka), input tax credit (ITC) on capital goods (i.e., fixed assets) is generally allowed but with conditions.
The rate of ITC and eligibility vary by:
State VAT Act
Type of FA (e.g., machinery vs furniture)
Usage (used in manufacturing or taxable sales)
✅ General Guidelines (under MVAT as example):
Type of FA Eligibility VAT Set-off
Plant & Machinery used in manufacture Yes Full ITC (or phased over 3 years)
Office Equipment/Furniture Often not eligible No or partial ITC
Vehicles Usually not eligible No ITC
📉 Reduced Set-Off under MVAT Rule 53 (if applicable):
If VAT paid on capital goods used partially for exempt or non-taxable goods/services, set-off may be reduced by 3% to 4% of the purchase price.
This is called reduction in set-off.
📋 Documentation/Declaration:
You must mention asset type and % claimed in your VAT returns and audit report (Form 704).
Keep invoices clearly mentioning:
TIN of seller
VAT charged
Description of FA
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