What about VAT paid on Capital expenditure for new project.

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C.A Alok Mukherjee (Querist)
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14 August 2010 We are a registered dealer in West Bengal and pays regular VAT on sale of our processed product. We are going into a new project of the same product into a different district in WB. My question is since it is a new venture, we may require lot of initial expenditure in the form capital goods and allied expenses thereon we have to pay the VAT also on such expenditure. So far as the new project is concerned it's commercial production will be held at a later date but vat paid on such capital goods can we set off as Input tax credit from our existing output vat?

CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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14 August 2010 IF SUCH CAPITAL GOODS RELATED TO DIRECTLY OR INDIRECTLY TO MFG PROCESS, THEN YOU CAN PUT IT IN ACCOUNT DEFFERED VAT ON CAPITAL GOODS AND TAKE CREDIT WHEN PRODUCTION IS START.

IF IT IS NOT RELATED TO MFG PROCESS, E.G. VAT ON OFFICE EQUIPMENTS , THEN IT IS CAPTIALZED WITH COST OF ASSET.

C.A Alok Mukherjee

C.A Alok Mukherjee (Querist)
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14 August 2010 It is directly or indirectly for manufacturing process of the same product but the expansion plant will be located in a different district of the same State. Why then it will be deferred till commercial production not understood. Well i am not sure but i could n't find the logic because we are paying vat in wb on regular basis. Is the credit of vat on capital goods is based on unit to unit ?

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CA. BIJENDER KR. BANSAL

CA. BIJENDER KR. BANSAL (Expert)
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14 August 2010 TIN NO IS ALLOTED STATE WISE, I.E IF IT IS WITHIN THE SAME STATE THEN YOU CAN TAKE CREDIT OF SUCH VAT ON SECOND UNIT. OUR 3 UNIT IN UP, AS PER UP VAT ACT, VAT ON CAPITAL GOODS CAN BE TAKEN IN 3 YEAR IN MARCH MONTH.
1 UNIT IS STARTED IN APIRL 2010, WE CAN TAKE CREDIT OF 1/3 PART OF VAT ON CAPITAL GOODS TILL 31ST MARCH IN MARCH 201O AGAINST VAT LIABLITY OF OTHER UNITS WITHIN SAME STATE.