Dear Professionals,
As per Rule 53 Sub Rule 7A of MVAT Act if any Office Equipment, Furniture or Fixtures if Capitalised Set Off is available Subject to Reduction of 3% of Purchase Price.
Kindly clarify as to what does Purchase Price means ?
Does it mean that if VAT Paid is Rs. 4 or Rs. 12.50 then it is reduced by 3% and the balance is eligible for Set-Off i.e. Input Tax Credit.
Thanking You.
Regards,
Viral
You Just refer this sheet and you might get answers to all your questions
SECTION 53 7A, SAYS FOR REDUCTION OF LIABILITY
SAY IF INPUT TAX CREDIT IS 100 RS. ON OFFICE EQUIPMENT AND ....
THEN RS. 3 WILL BE REDUED AND U WILL BE ALLOWED SET OF RS. (100-3) = 97.
| Originally posted by : CA rohit kasat | ||
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SECTION 53 7A, SAYS FOR REDUCTION OF LIABILITY SAY IF INPUT TAX CREDIT IS 100 RS. ON OFFICE EQUIPMENT AND .... THEN RS. 3 WILL BE REDUED AND U WILL BE ALLOWED SET OF RS. (100-3) = 97. |
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The three percent reduction is on purchase price and not on input tax credit and hence your interpretation is not correct.
| Originally posted by : Viral | ||
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Dear Professionals, As per Rule 53 Sub Rule 7A of MVAT Act if any Office Equipment, Furniture or Fixtures if Capitalised Set Off is available Subject to Reduction of 3% of Purchase Price. Kindly clarify as to what does Purchase Price means ? Does it mean that if VAT Paid is Rs. 4 or Rs. 12.50 then it is reduced by 3% and the balance is eligible for Set-Off i.e. Input Tax Credit. Thanking You. Regards, Viral |
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Purchase price means the amount of valuable consideration paid or payable by a person for any purchase made including any sum charged for anything done by the seller in respect of goods at the time of or before delivery thereof.
However, if cost of insurance for transit of cost of installation are charged seperately than the same is to be excluded from purchase price.
Duties levied or leviable on the goods under Central Excise Act, 1944; the Customs Act, 1962 and Bombay Prohibition Act, 1949 shall be deemed to be part of the purchase price.
However purchase price shall not include tax paid or payable under MVAT Act.
In case of reduction u/R 53 (7A), if the purchase price is say Rs. 100/- and the Mvat is 5% i.e. Rs. 5, than the reduction is Rs. 3 (i.e. Rs. 100*3%) and the setoff allowed is Rs. 2 (i.e. Rs. 5(-)Rs. 3)
Dear Viral,
Other way to solve your query is that you can directly reduce the 3% from the VAT rate applicable and the rate available to you will be the rate at which credit shall be available to you.
Eg- 5% is the rate of VAT on furniture purchased of Rs. 1000. Then the credit available to you will be (5% - 3%) i.e 2%. Amount of credit shall be 1000*2%= 20. or you may calculate credit as follow
[(1000*5%) - (1000*3%)] = 50-30 = Rs.20
Dear Freinds,
Whether "Lab Equipments" and "Electrical Fittings" Purchased and Capitalised attracts 3% reduction in set off under MAHA Vat? (for Manufacturing unit).
Could some one elaborate on these items?
Reduction of 3% under rule 53 (7A) is on office equipements and furniture and fixtures. Therefore, always check whether your assets falls in this head to calculate 3% reduction.
Dear Viral
For purchase price definition please follow the linkhttps://teamtaxplanet.blogspot.com/2015/12/important-definition-in-mvat-and-their.H T M L
For reduction rate the following example will be helpful;
You can directly reduce the _ _% from the applicable VAT rate and the balance rate will be the rate at which credit shall be available. Eg- 5% is the rate of VAT on furniture purchased of Rs. 1000. Then the credit available to you will be (5% - 3%) i.e 2%. Amount of credit shall be 1000*2%= 20. or you may calculate credit as follow [(1000*5%) - (1000*3%)] = 50-30 = Rs.20
CAclubindia
