Vat Input credit

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varun gupta (Querist)
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15 May 2009 Hi,

Plz let me know that can a Leather Manufacturing company having Factory at ground floor & office at first floor take VAT input credit during following purchases:

a)Vat paid on Purchase of steel & iron for consturction of factory.
b) Vat paid on purchase of cement & other building material for construction.
c) Vat paid on purchase of Air Conditioner for Factory/Office.
d) Vat paid on purchase of wood & plywood for construction of Almirah in the office.

Thanks in advance.

CA Parvin Ahuja

CA Parvin Ahuja (Expert)
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15 May 2009 Under Delhi Value Added Tax Act you can claim input credit for capital items in 3 years i.e 1/3rd each year.

varun gupta

varun gupta (Querist)
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15 May 2009 Thanks Parvin.But i still have some doubt:
a) Will input credit be claimed for all such fixed assets purchased by company?
b) Is the treatment same under Haryana Vat & UP Vat?

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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02 August 2025 Here's a clear explanation on VAT input credit for your queries regarding a leather manufacturing company and purchases related to factory and office construction:

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### 1. **VAT Input Credit on Various Purchases**

| Purchase Type | Input Credit Allowed? | Notes |
| ----------------------------------------------------- | ------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------ |
| a) Steel & iron for factory construction | **Yes** (capital goods input credit) | VAT on capital goods can be claimed, usually allowed to be claimed in installments (e.g., 1/3rd per year over 3 years in Delhi VAT). |
| b) Cement & other building materials for construction | **Yes** | Treated as inputs for business; VAT credit allowed. |
| c) Air Conditioner for Factory/Office | **Yes** (capital goods input credit) | Allowed, as air conditioners are capital goods for business use. |
| d) Wood & plywood for office almirah construction | **Yes** | Considered as inputs related to business, VAT credit allowed. |

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### 2. **Treatment of Capital Goods Input Credit**

* Typically, **input credit on capital goods (like AC, steel, iron, cement for construction)** is allowed to be claimed **over a period of years** (e.g., 3 years with 1/3rd each year) to align with asset depreciation.
* This method avoids large upfront credit claims and spreads the benefit.

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### 3. **State-wise Differences (Delhi, Haryana, UP VAT)**

* **Delhi VAT Act** explicitly allows capital goods input credit in installments (Rule 53(7A)).
* **Haryana and UP VAT Acts** also generally allow input credit on capital goods but **the exact provisions and installment rules may vary**.
* It's recommended to check the specific state's VAT Act and rules or consult with a local VAT expert for precise compliance.

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### Summary

* Yes, you **can claim VAT input credit** on all such purchases if they are used for business purposes.
* Capital goods credit may be **spread over 3 years or as per state rules**.
* Verify **specific rules in Haryana and UP** VAT laws to confirm installment or claim procedures.

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If you'd like, I can help you with the exact references from the relevant VAT Acts or a comparison chart between these states. Would that help?

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