Can someone please guide me whether there is VAT input credit available on purchase of Computers. Background of the Company: Its business is to render services relating to security systems, The Company is registered in Chennai and Tamil nadu VAT act is applicable.
2 Replies
Reena Verma
(CA Finalist)
(417 Points)
Replied 24 August 2010
INPUT CREDIT IS AVAILABLE FOR CAPITAL GOODS FOR WHICH 3 CONDITIONS ARE TO BE SATISFIED:
1] VAT MUST BE PAID.
2] SHELF LIFE OF THE ASSET SHOULD NOT BE LESS THAN 36 MONTHS AND
3] IT MUST BE DIRECTLY RELATED TO PRODUCTION.
SO ACCORDINGLY INPUT TAX CREDIT IS NOT AVAILABLE.
WAIT FOR OTHER REPLIES.......
Gagan Agarwal
(Manager)
(207 Points)
Replied 25 August 2010
If the company is a pure service provider and is not manufacturing / selling any goods (ie no output VAT liability of the company), there is no question of being registered in TNVAT Acvt and hence no question of getting input tax credit on any goods purchased by paying VAT.
In any case, VAT credit will not be available on computers, since it is not related to production of any taxable goods by the company.
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