Vat clarification

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 March 2012 I need some clarification regarding VAT for the following.
Hi Experst pl help me
We have purchased the spares and accessories paid VAT @ 5% / 14.5% and
our sale commodity rate of VAT is 5%. Whether treat it capital goods
or input, if treat capital goods what % is eligible for us to take
credit.

In this connection, Commissioner of Commercial Taxes, Chennai give the
clarification as spares and accessories are treating as an input and
avail the credit in the same month.

Kindly give the correct solution in this regard.

PUNIT JAIN

PUNIT JAIN (Expert)
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10 March 2012 Clairification by CCT is correct. Spares and accessories will be treated as inputs and ITC can be availed on monthly basis.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

13 March 2012 Thank you very much for your reply in this regard. further i request u to please provide the acts / sections, enable us inform to the local sales tax officials.

Querist : Anonymous

Querist : Anonymous (Querist)

22 March 2012 Thank you very much for your reply in this regard, further i request u to please provide the acts / sections enable us inform to the local sales tax officials.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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02 August 2025 Hey! Here’s a clear explanation for your VAT query about spares and accessories and input tax credit (ITC):

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### Your situation:

* You bought spares and accessories paying VAT at 5% or 14.5%.
* Your **sales VAT rate on your main commodity is 5%**.
* You want to know if these spares/accessories are treated as **capital goods or inputs** for ITC purposes.
* And if capital goods, what percentage of ITC can be claimed.

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### Clarification:

1. **Spares and Accessories are treated as Inputs:**

* As per the **Commissioner of Commercial Taxes (CCT), Chennai**, spares and accessories are considered **inputs** (not capital goods).
* Therefore, you **can claim full input tax credit on these spares and accessories** in the month of purchase.

2. **Relevant legal provisions:**

* Under the **Tamil Nadu Value Added Tax Act, 2006**, inputs include goods used in manufacture or sale of taxable goods.
* **Section 5(1)** allows dealers to claim ITC on inputs used in the course of business.
* Spares and accessories used in machinery for manufacture or in business operations fall under this.

3. **Capital goods treatment:**

* Capital goods (like machinery, plant, equipment) have a different ITC rule.
* Usually, ITC on capital goods is claimed over a period (say 12 months or so), sometimes on a pro-rata basis.
* Since spares/accessories are treated as inputs, you don’t have to follow the capital goods ITC restriction.

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### Summary:

| Item | Treated As | ITC Eligibility |
| ------------------ | ------------- | ------------------------------------------ |
| Spares/Accessories | Inputs | Full ITC in the month of purchase |
| Capital Goods | Capital Goods | ITC claimed over specified period/pro-rata |

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### What you can tell your local tax officials:

* Refer to **Tamil Nadu VAT Act, 2006, Section 5(1)** for ITC on inputs.
* Mention the Commissioner of Commercial Taxes clarification (you can request a copy or circular).
* Emphasize that spares and accessories are inputs, not capital goods, so full ITC is allowed.

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If you want, I can help draft a letter citing the exact section and request official clarification or circular from CCT.

Would you like that?

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