Machinery purchase and VAT Set off

you have to book machinery amount excluding vat amt. in fixed assets.

For Capital goods you cannot claim 100% Vat set off, a certain is only allowed for Setoff. They % may vary from State to State, so you have to book the machinery with Machinery Value + VAT which is not allowed to be setoff.

The Total cost incurred to purchase the machinery is Rs.105000/- hence full amount should be capitalised even though a part amount of vat paid can be setoff. Refer AS-10.