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Sales Tax

Shreyansh Jain (Director) (59 Points)

04 May 2011

we are into trading of masala items

we are planing to install a small machine .......... of grinding unit

will we get a vat credit on machine if yes how can we do it.......

plz do reply

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4 Replies

(Guest)

Hi sir,

Q.1) Ans:Manufaturing\production unit and trader get the benefit of input tax credit of Vat on capital goods.

Q2) Ans:As per your normal calculation out put - input

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AUDITOR VINOTHKUMAR (a) (870 Points)
Replied 04 May 2011

DEAR, SHREYANESH , :As per your normal calculation out put - input

BUT U CLAIM i think

Ist, year 50%

2 nd year 30%

3 rd year 20%

CA Govind Gupta (Proprietor) (152 Points)
Replied 04 May 2011

yes, you can claim Input Vat on that because the machine is related to your business.

Now the thing how to claim Input Vat on Capital Assest..??

we can claim Input Vat on that 1/3rd for the three consecutive year from which we purchase that machinery.

for that we took a small example. see we purchase machinery of 40000/-

(+) Vat @ 12.5 % 5000/-

Total 45000/-

say, we pur that in FY 2009-10 nw we ca claim Input on that as :

in FY 2009-10 (5000*1/3) = 1667.00

in FY 2010-11 (5000*1/3) = 1667.00

in FY 2010-11 (5000*1/3) = 1666.00

Total 5000.00

I hope you able to understand......

Thankssss

RENGARAJ R.K (ADVOCATE) (7557 Points)
Replied 05 May 2011

First of all, Give a declaration to the supplier of machinery that the machinery is to be used as capital goods for the manufacture. By doing so, the rate of tax is only 4% (this is applicable for Tamilnadu) i.e the rate for common inputs. Regarding availing of ITC, In the first year of commencement of commercial production, 50% of the input tax credit not exceeding 50% can be availed and the rest in the second or third year. kindly mention the state when raise question or clarification so that the reply will be given according to that state.

Please also note that the accessories, spare parts of the machinery purchased later on also eligible for ITC.

rengaraj.r.k