OVat & Service Tax on Civil Work (Foundation for machines)

[Bhalchandra Ramdasi]

Respected Sir,

 

We have to do Civil work i.e. foundation for machines for our customer in Orisa. We would like to know :

Whether can we or our customer avail Credit of Input services, input material and Vat Set off ?

Thanks,

[YAGAY and SUN]

From 01-04-2011, CENVAT credit on lying the foudation for capital goods are not allowed.  Even, VAT set up under OVAT Act will not available.

You would have to capitalised the civil work and will have to avail depreciation according to Income Tax Act.

AI Summary

CENVAT credit on foundations for capital goods denied; VAT set-off unavailable, civil work must be capitalised and depreciated.
CENVAT credit on laying foundations for capital goods is not allowable and VAT set-off under the OVAT Act is not available for such civil work; input services and input material credits are thus unavailable and the expenditure must be capitalised and recovered through depreciation under the Income Tax rules.