Vat input credit

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2013 There is a contract for 'water treatment plant related work' for which the contractor has purchased material and has charged VAT in the bill.So are we liable to take VAT input credit?

Chirag Chordia

Chirag Chordia (Expert)
Follow

10 January 2013 u can take the credit of input VAT

Querist : Anonymous

Querist : Anonymous (Querist)

10 January 2013 But the expense has been charged to repair and maintainance.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
Follow

02 August 2025 Here’s the situation regarding VAT input credit for your water treatment plant contract:

---

### Key points:

* The **contractor purchased materials** for the work and **charged VAT** in the bill to you.
* You want to know if you can **take input VAT credit** on this VAT paid.
* The expense is **charged under repair and maintenance**.

---

### VAT Input Credit Eligibility:

1. **Input VAT Credit can be claimed on VAT paid on goods or materials used for business purposes** and for making taxable sales.

2. If the **contractor has charged VAT separately** on the materials supplied as part of the contract, then you can generally **claim input VAT credit on that amount**.

3. The **nature of expense (repair & maintenance)** does not bar claiming input credit, **provided the expense relates to your business and taxable sales**.

4. However, if the contract is **only for services (like repair/maintenance service)** and the VAT charged is on service part (which may be outside VAT and under Service Tax), then input VAT credit may **not be available** on the service component.

---

### So, in your case:

* If **VAT is charged on materials purchased by the contractor and billed to you separately or clearly identified in the invoice**, then **you are entitled to claim input VAT credit** on that VAT paid.

* If VAT is **not clearly shown or bundled with service charges**, it might be difficult to claim the credit.

---

### Recommendation:

* Ensure the contractor provides **proper VAT invoices** showing VAT on materials.
* Maintain proper records for input VAT credit claims.
* Confirm that the materials purchased are used for taxable business purposes.

---

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