01 July 2010
one of our client(individual)was established factory on 1-4-2008 but production was started on 25-2-2010.Is he eligible to claim input credit,paid on capital goods(machinery) purchased at the time of establishment of factory for business purpose.In the following cases. 1.if he files nil returns form 1-4-2008.If yes what is the procedure? 2.If he does not files any returns form 1-4-2008.
1) When capital goods were purchased at the time of establishment and registered under VAT Act at the time of establishment and declared VAT purchases whether capital / raw materials, etc, in the VAT return having domestic sales, then he can claim VAT input tax credit. Otherwise with nil return without declaring purchases, he cannot claim VAT ITC.
2) From the time of factory establishment, when something or the other production is going on, you have to file VAT returns otherwise NIL return with the department.
So, either way, the client cannot claim VAT ITC on capital goods provided he should do domestic sales and declared his purchases in the monthly return.
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