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Regarding vat set-off

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CA Ketan Mahajan

Chartered Accountant

27 Points Posted on 12 June 2011

I want to know can anyone claim set-off on purchase of air conditioner,computer and its parts,machinery?

what is d general set-off scheme in mvat ?

Regarding accounting treatment-If we cannot claim set-off then can we capitalise the Input vat to the respective fixed asset.?

What about Vat on Expenses Bills.Shall we club such tax under respective expense head under P/L account?

What is d concept of VAT on Rent?

Replies (1)

Devendra

Chartered Accountant

3769 Points Posted on 12 June 2011

Respected Sir,

1) The Input VAT on Air Conditioner can be claimed at the rate of 9.5% [ ie. after reduction of 3%{12.5 - 3 = 9.5} ] and on the Computer it can be claimed at 2% (ie. after reduction of 3 % {5 - 3 = 2} ]. The 3% reduction in set-off can be debited to Vat Expense A/c.

2) If the VAT cannot be claimed then the same can be capitalized or it can be transferred to Vat Exps A/c.

3) VAT on expenses (P&L Items) shall be shown with the respective expense.

4) The definition of the term Dealer Sec. 2(12) includes a person engaged in the business of transfer of the right to use any goods for any purpose. VAT is leveied on hiring / renting of Machinery.