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Input vat on capital goods

llllVICTORllll (Internal Auditor) (511 Points)

30 August 2012

Hi all

My doubt for today is

Is input vat credit available for Capital goods purchased(say machinery purchased used in production process) under Kvat Act(karnataka)?,

if yes then should the rule of 50% in current year and 50% of credit in next year applies?

If credit can be taken, then where in the return should it be shown, as it is not a purchase that affects the purchase register, so cannot be shown as regular purchase.(esp if 50% rule applies)

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4 Replies

RAJU (LEARNER) (1089 Points)
Replied 30 August 2012

Yes, input tax credit can be availed. Provisions in the KVAT Act, 2003 provides for availing of credit only after the commencement of commercial production.

The availment of part of the credit in the month of procurement and balance in the subsequent year as in Excise is not being provided in KVAT Act, hence the same shall not be applicable.

The definition of input tax includes vat paid on all purchases. The provisions and definition gives an impression that legislature did not intend to differentite between revenue and capital purchases. Hence, purchase of capital goods can also be declared under the purchases. Care needs to be taken to ensure that credit is availed only in the month of commencment of commercial production.

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