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wether VAT/Excise/Custome Duty on Purchase of Fixed assets Capitalised
Dear Subramani
I think one can take vat setoff & cenvat credit of excise so it is not needed to capitalise, other expenses like transport, loading, unloading, erection, commissioning are able to be capitalised.

I also agree with abhijit that which tax is adjusted with out tax which is not to be captalaised.
But one thing is that if we will adjust with out put tax then in that condition if we will sale that capital items with in three year we should reversed with input either we will capitalised then no revsersel entry of tax has been made.
Pradeep Shamra

i feel Excise duty on capital assets can't be capitalized, we have to take cenvat credit of the same, however, it can't be availed in single year. It has to be spread over the no. of years for which the asset would be in use/ existance. However, not sure about VAT or other duties..
Hi Swapnil,
You are right but I would like to make one correction. As you said, the cenvat credit should be spread over the no. of years of use of the machinery. Rather you can take 50% of total cenvat, Edu. Cess and S & H Edu. Cess credit in first eyar of capitalisation (Or purchase of Capital Asset as in case of Capital WIP) and balance in next financial year.
In vat, there is a deduction @3% in vat setoff, this deduction should be capitalised & balance of vat can be treated as vat setoff.

Dear Abhijit
You are 100% right. I want to add that INPUT VAT on all capital items is not allowed . You can claim INPUT VAT on the capital item which are to be used in production of Taxable Goods only. Therefor INPUT VAT is not available on Civil Work, Office Furniture, Office Equipment etc. Capitalize VAT on which INPUT VAT is not available/ less available only.

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