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Vat

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(Querist)
19 May 2014 treatment of vat on purchase of fixed assets
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Sandeep Dharar

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Sandeep Dharar (Expert)
20 May 2014 In the case of capital goods purchased for business, only the principal sum should be capitalized leaving the VAT element as a recoverable sum (Input Tax). For example, if machinery worth Rs 10 lakh was purchased and VAT amounting to Rs 1,25,000 paid on it, then only the original value of Rs 10 lakh is capitalized under 'machinery' account. The VAT amount of Rs 1,25,000 should be debited to the VAT account and ultimately reflected as Input Tax.
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Rupesh Jain

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Rupesh Jain (Expert)
22 May 2014 yes answer by sandeep is correct and you can use the input VAT for pay you vat liability.
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