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Input credit on capital goods

Saisumanth S (student CA FInal) (64 Points)

17 May 2016

anybody please let me know whether can we take input credit on capital goods if we purchased the same goods in the march month but forgot to take in the same month and can we take credit in any further succeeding month.

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6 Replies

Mangilal Anchalia (Accountant) (27 Points)
Replied 17 May 2016

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Deepesh Jhawar (Chartered Accountant) (41 Points)
Replied 17 May 2016

CENVAT Credit Rules do not prescribe any time limit for availing CENVAT credit on capital goods. It only states that CENVAT credit on Capital Goods must be taken maximum @ 50% in the same financial and remaining in subsequent year. Time limit of 1year from invoice date is not applicable in case of Capital Goods.

Hence, if CENVAT credit on capital goods has not been taken in the same financial year, full CENVAT credit may be taken in the next financial year.

However, it must be noted that depreciation must be taken on (Asset value (-) CENVAT credit).

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Rucha A (Sr. Associate-Audit and Taxation) (174 Points)
Replied 18 May 2016

pursuant to rule 4 (2) of cenvat credit rules, (a) credit on capital goods upto 50% can be availed in the same financial year, (b)the balance of credit can be availed in subsequent f.y. The word 'Balance' can be interpreted as 50% in same n balance 50% in subsequent, or 0% in same fy n balance 100%in succeeding fy.
Further, in terms of amendment in definition of input notified in budget 2016, input shall include the capital goods if the value of same is upto rs. 10,000, it means u need to take 100% credit for the capital goods if value per unit falls below 10,000.

Divyam Agarwal (Practicing Chartered Accountant) (959 Points)
Replied 18 May 2016

Yes you can take it in succeeding months.

Saisumanth S (student CA FInal) (64 Points)
Replied 19 May 2016

Thank you so much for your valuable suggestions.....But the thing is in the last fy we claimed 50% input credit on some capital goods in the month of may but now 50% should be claim in the same month i.e., may month itself or we can claim in any month of present fy.