13 August 2010
Dear Experts, This is the third time i am putting this query still not replied sir. It will be great if the experts reply me for this question. If a firm purchases fixed assets such as (1) Plant & Machinery (2) Furniture & Fittings (3) Wind Mill (4) Vehicles Will the firm be eligible to take Input Tax Credit on the VAT paid on all these fixed assets or only on Plant & Machinery. VAT provisions are applicable as per Tamil Nadu state's act. Please provide me the link or quote the section (under Income Tax Act or respective VAT act) based on which i should take or not take input tax credit on the above items. Your help is highly appreciated. With regards, Rajesh.
13 August 2010
w.e.f. 1-1-2007, as per S. 19(3)(a) Input tax credit on Capital Goods used in the manufacture of taxable goods is allowed.
Capital Goods used in manufacturing activity would be eligible for Input Tax Credit. Input Tax credit would not be eligible where the capital goods are used exclusively in the manufacture of Exempted Goods, e.g. Plant & Machinery.
Input tax credit on capital goods used in trading activity shall not be eligible, like vehicles, furniture & fixtures, wind mill, etc.
In case of new units, input tax credit would be allowed only after the commencement of commercial production over a period of 3 years. Unavailed input tax credit shall lapse.
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