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VAT on capital goods

16 April 2009

The query is reagarding Input tax credit for VAT on capital goods. While calculating VAT payable, our CA has considered only 1 % out of 4% VAT on capital goods for input tax credit. and bal. 3% is transfered to respective assets a/c. Is there such limit for input tax credit for capital goods.

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12 Replies

SNEHASREE (ARTICLED ASSISTANT) (102 Points)
Replied 16 April 2009

NORMALLY INPUT TAX CREDIT ON CAPITAL GOODS CAN BE TAKEN ONLY UP TO 50%.AND BALANCE 50% SHOULD BE CARRIED FORWARD TO NEXT YEAR.

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Amita S. Gokhale (Service) (107 Points)
Replied 16 April 2009

Hi Snehashree ..did u mean that we can get 100% credit but 50% in first year n 50% in next year..Also tell me the entries which I have mentioned in the query are wrong ?

Dilip Kadam (services) (119 Points)
Replied 17 April 2009

Originally posted by :Amita S. Gokhale
"	Hi The query is reagarding Input tax credit for VAT on capital goods. While calculating VAT payable, our CA has considered only 1 % out of 4% VAT on capital goods for input tax credit. and bal. 3% is transfered to respective assets a/c. Is there such limit for input tax credit for capital goods.	"

kindly go through your ca opinion. 50% rule apply in excise input only not for VAT

SNEHASREE (ARTICLED ASSISTANT) (102 Points)
Replied 17 April 2009

HI AMITA

IAM SAYING ABOUT TN VAT. ACCORDING TO TNVAT ACT, INPUT TAX CREDIT ON CAPITAL GOODS CAN BE CLAIMED UP TO 50% IN THE FIRST YEAR AND BALANCE AMOUNT IN THE SUCCEDDING YEAR. IF YOU BELONGS TO SOME OTHER STATE PLEASE REFER CORRESPONDING VAT ACT.

aniket (Accountant) (561 Points)
Replied 17 April 2009

as per MVAT Act u will get 100% set off in case of machinery.

Other than machinery u will get set off after 2% reduction.

Eg if funniture VAT 12.5% then u will get only 10.5%.

In case of car, No set off available.

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Amita S. Gokhale (Service) (107 Points)
Replied 18 April 2009

Hi Snehasree

Thanx. We are from Maharashtra.

Amita S. Gokhale (Service) (107 Points)
Replied 18 April 2009

Hi aniket

thanx for info. let me know what is the set off limit for computers and tools as well.

aniket (Accountant) (561 Points)
Replied 18 April 2009

Hi Amita,

If computer and tools both r using for manufacturing purpose then u will get 100% set off.

if both r using for other than manufacturing like office use then u will get set off after 2% reduction.

EG computers in office

Rs 1000 + 40(VAT 4%)= 1040/-

then set off available in MVAT Rs. 20/- only

If tools in Factory

then 1000 + 123 (VAT 12.5%)= 1123/-

then set off availabel In MVAT RS 113/-

But dont charged depreciation on Rs 40/- on computers and RS 113/- on Tools

Charged Depreciation on RS 1000/- on both

Not on Rs 1040/-on Computers and 1123/- on Tools

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aniket (Accountant) (561 Points)
Replied 18 April 2009

Correction in above statement

Set off available as MVAT on on Tools Rs 123/- (Full set off)

But all my statement as per MVAT ACT 2002

rohan singh (ARTICLE) (25 Points)
Replied 17 April 2014

Originally posted by : aniket
	Hi as per MVAT Act u will get 100% set off in case of machinery. Other than machinery u will get set off after 2% reduction. Eg if funniture VAT 12.5% then u will get only 10.5%. In case of car, No set off available.