Input credit - karnataka

This query is : Resolved

VINITHA RAJESH (Querist)
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02 February 2012 Hi,

As per the Karnataka VAT Act, input credit can be claimed for VAT paid on items which are directly or indirectly related to the finished goods. Resale is an important criteria for eligibility.

If the goods are used for R&D expenses,
1. Will the purchase be considered as for internal consumption

OR

2. Will this be considered as indirectly related to finished foods.

Can we claim VAT input credit for purchases relating to Research & Development.

Please advice.

CA. Hari Kishan

CA. Hari Kishan (Expert)
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05 February 2012 Please refer to section 10(2) of the KVAT Act, 2003. The stress is on that the goods shall be purchased for the purpose of USE IN THE COURSE OF BUSINESS. So the fact that use in the course of business be established, there is no restriction under section 11 of the VAT act restricting the claim