Regarding vat set-off

Respected Sir,

1) The Input VAT on Air Conditioner can be claimed at the rate of 9.5% [ ie. after reduction of 3%{12.5 - 3 = 9.5} ] and on the Computer it can be claimed at 2% (ie. after reduction of 3 % {5 - 3 = 2} ]. The 3% reduction in set-off can be debited to Vat Expense A/c.

2) If the VAT cannot be claimed then the same can be capitalized or it can be transferred to Vat Exps A/c.

3) VAT on expenses (P&L Items) shall be shown with the respective expense.

4) The definition of the term Dealer Sec. 2(12) includes a person engaged in the business of transfer of the right to use any goods for any purpose.  VAT is leveied on hiring / renting of Machinery.

Regards,

Devendra Kulkarni