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Cenvat credit of cash purchase

chandan pal (Assistant Accountant) (81 Points)

11 May 2016

Can one claim vat input on cash purchases. Lets say we purchase a computer from Incredible Connections and payment mode cash. Can we claim input vat for tax invoice has been issued by supplier and payment made on cash?

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5 Replies

Harish (Student) (29 Points)
Replied 11 May 2016

We can claim input tax credit on cash purchases.

But you are purchased a computer it is not a Raw material, It is final prouct so we are not producing any material with computer. You are purchasing a computer for your own/official purpose. So that in your product input tax credit is not eligible.

Harshad Kanekar (Taxation and Accounts Executive) (314 Points)
Replied 11 May 2016

I Agree with the point mentioned by Harish but it depends on the market you are dealing. If you deal in computers it becomes your Stock in trade and hence you can take input credit.

Secondly not all capital goods are having full restrictions. There are products which are eligible for restriction at certain % depending on the State VAT. Hence I suggest you that you refer to the website of respective state vat applicable to you and take decision accordingly.

Hope it clearifies your doubt.

Regards,

Praveen kumar MBA,L.LB (Assistant Manager Indirect Taxation(GST)) (273 Points)
Replied 11 May 2016

Sir,

In the recent amendment in cenvat credit rule, office equipment also eligible to take credit if its used in the factory of manufacturing of final product. so can avail computer also

Praveen kumar.C

Punith (Article assistant) (107 Points)
Replied 12 May 2016

Hi Chandan,

First yes you can take VAT credit for the cash purchased asset provided it is used in the business to give out put service, Later it also depends on the state VAT Act,...

Praveen Tawania (Owner) (369 Points)
Replied 12 May 2016

Hello Candan!

Yes, you can claim input tax credit on invoce generated for your cash purchase by a registered deler of computer seller/supplier. if you are a registered dealer of sale/supplier of computers.

Otherwise you can not claim Input Tax Credit.