Asset is bought for Rs. 100. on which VAT amount included is Rs. 4.
Which amount should be capitalized if a buyer is registered dealer?
Mayank Saraogi
(Learner)
(170 Points)
Replied 09 September 2011
dear if the asset is just worth rs100 thn its better to depriciate the whole amnt in the current yr....
as for the capitalization part100 will be relevant as its the actual cost becoz4 will be taken as credit and the same will be utilized for the payment of Vat
On the presumption that the dealer is not using the compound levy scheme types
praveen
(Chartered Accountant)
(6971 Points)
Replied 09 September 2011
I hope that your only quoting an example out of Rs.100. If under the local vat act in which your business operates allows VAT as input, consider taking the credit otherwise add to the value of Fixed Asset.
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Ram Avtar Singh
(Nagari Sultanpur U.P.Delhi)
(14487 Points)
Replied 10 September 2011
You can take vat credit only on Plant and machinery, commercial vehicle, Testing Equipment, Transformer. if other assets then vat will be capitalized with assets. if spare parts then treat as repair & Maintenance of machinery.
DAYANANDA K N
(ACCOUNTS EXCECUTIVE)
(575 Points)
Replied 10 September 2011
In general credit on VAT is available with few exceptions. If all falls under category of "eligible for input credit" than you should capitalise only Rs.100. If it falls under exceptional category than you should capitalise Rs.104.
Regards
Dayananda
CA Vap Patel
(Practice)
(1205 Points)
Replied 11 September 2011
You can take vat credit only on Plant and machinery, commercial vehicle, Testing Equipment, Transformer.If your assets is falling in this class of assets then 3% Vat will be added to your fixed assets(i.e.Rs.3) and 1% you can claim as set off(in your case 1% will be Rs.1)
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