We are a machine manufaturer based in Delhi and our machines are sold under 5% DVAT rates. As with any other machine, it contains all sorts of parts which are plastic items/ metal items/ electrical items and so on. On purchase many items are purchased at 5% rate and many at 12.5% rates. My question is when we sell these parts as spare parts after selling a machine to my customer, should we be charging a flat rate of 5% DVAT on all parts or rate depending upon what we paid at the time of purchase? To my understanding, if the machine is sold at 5% VAT rate then its parts should also be sold at 5% rate irrespective of what VAT rate we paid at the time of purchase.
Thanks in advance.
Satish
CAclubindia
