How the capital goods will be dealt with under VAT?
There is no uniformity of the definitions of capital goods given under various state VAT acts, but As per the model VAT bill, Capital goods means plant, machinery and equipment used in the process of manufacturing excluding civil structures. Tax paid on capital goods will be eligible for tax credit. However for what period it will be adjusted may vary from state to state. The set-off may be given on the entire purchases or it may be given for limited amount or limited period or it may not be given at all. Over all, input tax credit on Capital goods cannot be claimed by a trader, but a manufacturer is eligible for input tax credit on “Capital Goods” used in the process of manufacturing of taxable goods. According to the west Bengal VAT act, Input tax credit on capital goods will be available for traders and manufacturers of west bengal. Tax credit on capital goods may be adjusted over a maximum of 36 equal monthly installments.
