Vat input credit

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 January 2013 Hi

We are the software company and we had purchased Computers, LCDs, Fridge, etc. for office purpose now my question is can we take VAT input credit on above items after retaining 3% of VAT amount under MVAT(Maharashtra) scheme?

Ankit Varia

Ankit Varia (Expert)
Follow

08 January 2013 Yes setoff can be availed. Refer Rule 53(7A) of MVAT Act.

Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2013 what the situation in case we have Softaware sale and AMC in ratio of around 55:45

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

02 August 2025 Here’s a clear answer to your query about VAT input credit on office assets and the software sales/AMC mix in Maharashtra:

---

### 1. **VAT Input Credit on Office Assets (Computers, LCDs, Fridge, etc.)**

* Under **Maharashtra VAT Act**, you **can claim input tax credit (ITC) on capital goods like computers and LCDs** purchased for business use.
* However, as per **Rule 53(7A) of MVAT Act**, you need to **retain 3% of the VAT amount paid** on such goods. This means:

* You can claim **97% of the VAT paid as input credit**.
* The remaining 3% VAT is considered **non-creditable** (cannot be claimed).

This rule is designed to restrict full credit on capital goods.

---

### 2. **Regarding Software Sales and AMC Ratio (Approx. 55:45)**

* When your sales comprise **software products (which might be exempt or differently taxed)** and **Annual Maintenance Contracts (AMC)**, the **eligibility for VAT credit depends on the nature of these supplies**.

* **Software Sales**:

* If the software is **customized software**, it may be **taxable**.
* If it is **canned or packaged software**, it may be **exempt** in Maharashtra.

* **AMC Services**:

* AMC is treated as a **service** and usually not subject to VAT but **service tax**.
* Hence, input VAT credit on purchases related to AMC services may not be fully available.

* In a mixed turnover scenario like 55% software sales and 45% AMC, **input credit needs to be proportionately allocated** based on taxable and exempt supplies.

* If part of your sales is exempt, **input VAT credit on inputs used for exempt sales is generally not available**.

---

### Summary:

* You can claim **97% of VAT paid on capital goods as input credit**.
* For **software and AMC mixed sales**, input credit must be **apportioned** based on taxable vs exempt turnover.
* It’s important to maintain proper records showing usage and sales composition.

---

If you want, I can help you draft a more detailed computation example or suggest how to maintain records for input credit apportionment. Would that help?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now