IS VAT CREDIT AVAILABLE ON CAPITAL GOODS

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HELLO FRIENDS,

Is vat credit is allowable on follwing Capital Expenses( bills) on which VAT is charged ???

 & If Credit is available then How much i.e proportionataly OR fully ???

coMPUTER, OFFICE EQUIPMENT , MOBILE (ASSET) , SOFTWARE CHARGES , FURNITURES & FIXTURES

DIWALI GIFT , SALES PROMOTION EXPENSES !!!

PLZ  REPLY ME as a helpful hand 

Replies (8)

if capital goods & other goods are purchases with in state fully credit of VAT are given to firm

vat credit on capital goods is allowed subject to variant applied by the state.......

 GROSS PRODUCT VARIANT:-. if the system adopt Gross product variant then it is not allowed.

 INCOME VARIANT:-if system adopt income variant then ...it also allows a deduction for depreciation on capital goods. however since the depreciation would depends upon the life of the assets. there is a practical difficulties with the calculations of the depreciation under this variant.

CONSUMPTION VARIANT.:- it neither distinguishes between capital and current expenditures nor specify the life of assets or depreciation allowances  for different assets..........

 hope you will now clear about it........

all the best

it differs among different variants of VAT........

Practically, VAT on capital goods can be taken as input only when they are directly relatable to the ongoing activities of the business.

On a proper scrutiny, you could be devoid of taking input credit on items such as Mobile and Diwali Gift.

Yes, Capital goods purchased with in the same state are eligible for input tax credit, if and only if, there is an input tax and the capital goods is put for use to manufacture / related to the sale of taxable goods only, if not, then it becomes non-deductible. Further, the said capital goods must be put to use and atleast taxable sales must be begun to become eligible.

This is the position in Karnataka. Similar provisions will be there in your state also. Please refer.

Yes, practically vat on capital goods are allowed as credit..

V add the vat (set-off) on fixed assets and other capital goods to the actual set-off used and all of it as a whole is available as a credit..

Regarding the Diwali gifts, one is not eligible to claim the input tax credit, as it is disposed by way other than sales. All states make this non-deductible.

Yes we can eligible to take input tax credit on capital goods exclusive for manufacuring purposes only and purchase should be within the state.     If you purchased any capital goods for service purposes could not able to claim input tax credit


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