Tax credit of Capital goods
This query is : Resolved
yash chauhan
(Querist)
26 October 2009
Is taking Input vat credit on Capital Goods in equal 36 installments(1/36 in each month)wrong as per DVAT Act & Rules?
Please suggest me
Please suggest me
CA Gangadhar Mishra
(Expert)
26 October 2009
1/3rd for 3 consecutive years to be taken only for capital goods not fixed assets
ANIL JANGID
(Expert)
27 October 2009
AGREE
CA SANJAY MUKHERJEE
(Expert)
27 October 2009
Delhi Vat Act speaks about equal annual instalment of 1/3rd , so u can avail equally by 36 months - no problem.
Don't include the VAT paid in the cost of the P & M for claiming Depreciation.
Relevent provisions are as under
# (f) “capital goods†means plant, machinery and equipment used in the process of trade or manufacturing;
#(9)(a)Notwithstanding anything contained to the contrary in sub-sections (1) and (3) and subject to sub-section (2), tax credit in respect of capital goods shall be allowed as follows –
(i) 1/3rd of the input tax on such capital goods, in the same tax period, in which tax credits arises
(ii) Balance 2/3rd of such input tax in equal proportions in two immediately successive financial years.
Provided further that, no tax credit in respect of capital goods shall be allowed if such capital goods are used exclusively for the purpose of making sale of exempted goods.
Provided further that no tax credit in respect of capital goods shall be allowed on that part of the value of such capital goods which represents the amount of input tax on such capital goods, which the dealer claims as depreciation under section 32 of the Income Tax Act, 1961 (43 of 1961).
Don't include the VAT paid in the cost of the P & M for claiming Depreciation.
Relevent provisions are as under
# (f) “capital goods†means plant, machinery and equipment used in the process of trade or manufacturing;
#(9)(a)Notwithstanding anything contained to the contrary in sub-sections (1) and (3) and subject to sub-section (2), tax credit in respect of capital goods shall be allowed as follows –
(i) 1/3rd of the input tax on such capital goods, in the same tax period, in which tax credits arises
(ii) Balance 2/3rd of such input tax in equal proportions in two immediately successive financial years.
Provided further that, no tax credit in respect of capital goods shall be allowed if such capital goods are used exclusively for the purpose of making sale of exempted goods.
Provided further that no tax credit in respect of capital goods shall be allowed on that part of the value of such capital goods which represents the amount of input tax on such capital goods, which the dealer claims as depreciation under section 32 of the Income Tax Act, 1961 (43 of 1961).
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