How to treat vat on fixed asset

dear if the asset is just worth rs100 thn its better to depriciate the whole amnt in the current yr....

as for the capitalization part100 will be relevant as its the actual cost becoz4 will be taken as credit and the same will be utilized for the payment of Vat

On the presumption that the dealer is not using the compound levy scheme types

I hope that your only quoting an example out of Rs.100. If under the local vat act in which your business operates allows VAT as input, consider taking the credit otherwise add to the value of Fixed Asset.

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You can take vat credit only on Plant and machinery, commercial vehicle, Testing Equipment, Transformer. if other assets then vat will be capitalized with assets. if spare parts then treat as repair & Maintenance of machinery. 

In general credit on VAT is available with few exceptions. If all falls under category of "eligible for input credit" than you should capitalise only Rs.100. If it falls under exceptional category than you should capitalise Rs.104.

Regards

Dayananda

You can take vat credit only on Plant and machinery, commercial vehicle, Testing Equipment, Transformer.If your assets is falling in this class of assets then 3% Vat will be added to your fixed assets(i.e.Rs.3) and 1% you can claim as set off(in your case 1% will be Rs.1)