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Input vat

CA Asha (Student) (188 Points)

01 October 2013

For a Software services and products company, on what all inputs, can VAT be taken?

Ex: Can VAT be taken on Computer, Computer Hard disks purchased, Software etc though the company's sales basically relate to Software services and few software customised products.

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5 Replies

MJ Krishnamurthy (ACCT(Retd)) (7197 Points)
Replied 01 October 2013

You can avail the input tax of goods(software ) which go into the final product,or materials used in the process of manufacturing it can be availed as input credit......mjk

C.A. Sandeep Wawhal (Chartered Accountant PGDFM BCom.) (1823 Points)
Replied 01 October 2013

Computer Expenses are revenue expenses then full vat available if it is capital expenditure then input credit available after deducting 3% of taxable amount from tax. example if input tax credit is 12.5% then u can avail tax credit only 12.5% - 3% = 9.5% in case of capital expenditure.

CA Asha (Student) (188 Points)
Replied 03 October 2013

Thank you for the replies. I have one more question arising out of this.

The company provides software services, but the software purchased by it does not go into the final product. It is more in the nature of software which is necessary for providing service, but does not go into final product. Can Input VAT be taken on such software purchases?

C.A. Sandeep Wawhal (Chartered Accountant PGDFM BCom.) (1823 Points)
Replied 03 October 2013

only 9.5% vat available out of 12.5%. Total set off availa le only for software company.

C.A. Sandeep Wawhal (Chartered Accountant PGDFM BCom.) (1823 Points)
Replied 03 October 2013

It is justification of sales tax department but if you think claiming total tax credit is justifiable then you can claim. But you have to explain such justification to officer if called upon.