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Regarding vat set-off

CA Ketan Mahajan (Chartered Accountant) (46 Points)

12 June 2011

I want to know can anyone claim set-off on purchase of air conditioner,computer and its parts,machinery?

what is d general set-off scheme in mvat ?

Regarding accounting treatment-If we cannot claim set-off then can we capitalise the Input vat to the respective fixed asset.?

What about Vat on Expenses Bills.Shall we club such tax under respective expense head under P/L account?

What is d concept of VAT on Rent?

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1 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 12 June 2011

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.