Machinery term loan- Why GST amount on machinery is not added in machinery value for bank financing

Let us understand why the value of GST is not added in machinery cost for giving machinery term loans to the borrower.
#machineryloan #machineryfinance #machinerytermloan #ankushjain #caankushjain #shortsfeed

[@DeepPopat-nw2ct]

But now a days banks are financing gst on machinery considering the fact that though we get ITC but it takes long time and it may disturb cash flow of business

[@AnkushJain]

Nbfc take this call but technically it is incorrect as promoter gets his own margin funded by way of that

[@DeepPopat-nw2ct]

@@AnkushJain yes that's right sir

[@AnkushJain]

Yeah

[@rickshawalaassam4542]

Good

[@AnkushJain]

Thank you

[@vrajeshthakkar1015]

Thanks was looking of it

[@AnkushJain]

👍

[@rajshreemodi815]

Completey agree and anyways we shoulnt fund borrower for tax payment....

[@AnkushJain]

Yeah

[@vishalbari3139]

Sir, what if borrower turn over in less than 25 lakh?

[@AnkushJain]

All you have to see whether he is legally allowed to take input credit or not.. if not then you can fund.. you can confirm from borrower about this and take ca certificate also

[@mukeshbishnoi8343]

But promotor can claim depreciation on that amount despite on input claim .....

[@AnkushJain]

Yeah but that benefit is not available on first year for full amount.. it is divided across life cycle of asset

[@aratisalgaokar9563]

If GST is capitalised in machinery cost and if borrower is not going to claim ITC , whether GST on machinery cost be financed?

[@AnkushJain]

It is internal call.. we can't be sure about it.. some banks takes ca certificate from borrower confirming that ITC is not availed and then they finance gst also

[@chandan404]

If it is a new firm. Can it still claim benefit of gst input credit?

[@AnkushJain]

Yes

[@sidvsthewind]

What about SRTO loans?? Is it same??

[@AnkushJain]

SRTO? Full form ?

[@sidvsthewind]

Large vehicle loans. Small road transport and operator

[@AnkushJain]

On vehicles, I think input credit is not available on purchase as per law therefore it is funded by banks

[@AnkushJain]

On vehicles, I think input credit is not available on purchase as per law therefore it is funded by banks

[@arbiter_007]

I beg to differ with you sir.
Itc can be claimed for 50% only.
We usually finance invoice value on vehicle loans (including 28% gst) irrespective of borrower so fixed asset coverage ratio doesnt matter.
3rd- even interest on moratorium (before dcco) can be financed because as per AS 16, it is capitalised.

[@AnkushJain]

Hi Karan
Pl note that as per law, ITC on GST paid on vehicles is not available which is why it is considered part of cost and funded by the banks

[@arbiter_007]

@@AnkushJain thank you sir. Didnt know that.

[@arbiter_007]

@@AnkushJain one more thing. What would be entry of purchase of machinery in balance sheet asset side ?
Cost of machine plus 50% gst in fixed asset and remaining 50% gst in current asset (gst receivable) ??