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Vat on capital goods

VAT (Legacy) 846 views 4 replies

My client's type of business is manufacturing of pesticides. They are constructing an office building.

For placing the machinery they purchased Steel and Iron for which they had paid VAT.

is that VAT added to construction expenses itself or can be taken as input credit?

or else wat to do?

please guide me..

Replies (4)

Hello Chandrika

The cost of machine will not be added to Construction expenses as it is a Capital good.

Hence ur client can avail 50% credit on capital goods for the current year & remaining in the following year.

 

CHANCHAL

Dear Chanchal,

Chandhrika's question is that their client are construting office Building for placing the plant & machinery and for that they have purchased Iron and steel

Well Chandhrika, Vat Input is not available on any material used for the Building Construction, i.e. Sand, Cement, Steel, Iron, Angles etc.

Your client will not get the input Vat credit on purchase of above material, But if you can proove that the Iron and steel purchased was for the erection of the Machinery, without that the machinery cannot run and produce the production then in such case only such component of material which are used for the purpose of machinery installation/Erection input Vat can be claimed

Yes, Mr Vinay 

Now I also got her ques properly understood through ur explanation.

 

Thanks

CHANCHAL

Thank u so much Vinay sir..


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