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Query Regarding Reversal of ITC on Capital Goods if business is closed within 5 years of Purchase of Capital Goods., Goods and Services Tax - GST

Issue Id: - 115770
Dated: 12-12-2019
Query Regarding Reversal of ITC on Capital Goods if business is closed within 5 years of Purchase of Capital Goods.

  • Contents

Hello Dear Sir / Madam,

My query is I had recently purchased a machinery for business purpose and availed ITC worth ₹ 28000. But now after 11 months of purchase, I closed my business. So will there be any impact on ITC already availed ? Will i have to make any reversal of ITC already taken ?

Thanks in Advance.

Posts / Replies

Showing Replies 1 to 3 of 3 Records

1 Dated: 15-12-2019
By:- Rajagopalan Ranganathan


If you sell the machinery to a prospective buyer, you have to pay CGST and SGST or IGST on the transaction value of the machinery. For payment of tax you can utilize the credit available in your account. If still some amount of credit is available with you the same would lapse. But you have not mentioned about surrendering your registration certificate. Till you surrender your registration certificate you can keep the credit. It will lapse only on cancellation of your registration certificate by the Department.

2 Dated: 15-12-2019
By:- Rajendra Prasad

Dear Mr Manish,

You have to reverse the PROPORTIONATE ITC ...

1. The provisions will apply only if you cancel the registration.

2. If you sell the Machinery before 5 years or cancel your registration before 5 years , you have to reverse the ITC by taking the life of the machinery as 5 years.

3. Please see Rule 44 for complete details.

3 Dated: 23-12-2019
By:- Ganeshan Kalyani

I agree with the reply of Sri Rajagopalan Sir.


Old Query - New Comments are closed.

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