we have purchased machinery for100000/- (net amount) VAT charged by party5000/- & total cost of machinery including VAT105000/-. Now my question is can we claim VAT set off of5000/- then by what amount i should book my fixed asset.
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Machinery purchase and VAT Set off
Replies (3)
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.
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