VAT recovery

Hi we want to know whether the input VAT can be claimed in this transactions.

Du bills is being charged in the name of the parent company and the charges incurred is of the sister company . My question when the Parent company raises an invoice for the recharge invoice and charges VAT (please note no markup). Can we (Subsidiary) claim the VAT expenses ? If so for how many months can we claim it for ? 


Thank you 

SAJITH NAIR10/02/2023 13:28:37

If the parent company is recovering the charges for the Du bill (in the name of the parent itself) from the sister company, then it is required to charge VAT regardless of whether markup is there or not as it constitutes reimbursement of expenses. Further the recoverablity of the same for the sister company depends on whether the utility is used only for business purposes or whether it includes personal use as well. If this is a landline charge or office internet charge, they should be able to recover the same. However if these are mobile connections then the company will need to evidence that personal use is not there with proper mobile usage and recovery policy. if there is personal use, then claim should be restricted to business use portion.

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John mathias 11/02/2023 20:07:02

Hi Sajith Thanks for clarifying I also wanted to specify that The parent company Did not invoice for Du bills that go way back in 2020 can we still claim if they re-charge us or does The input VAT claim period clause get activated ? Please let me know

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SAJITH NAIR13/02/2023 10:37:24

If the parent company issues current dated then input can be claimed. However the parent company could be subject to penalties for not issuing invoices within 14 days, delay in payment of VAT etc. For the sister company since the invoices are being received now, there shouldnt be any time limit issue.

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John mathias 13/02/2023 14:40:06

Thanks a ton Sajith

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