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Input Reversal on Capital Goods, Goods and Services Tax - GST

Issue Id: - 117954
Dated: 10-5-2022
By:- Murari Kumar
Input Reversal on Capital Goods

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We have taken GST Input earlier on Capital Goods at the time of capitalization. Now as on 31st March 22 we discarded the same as the WDV was zero because the life was three years. as per GST rule the life of Capital goods was 5 Year. so it compelled to reverse rest input, after Input utilizing 5% per qtr for three years. is there any way to save that input.

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Showing Replies 1 to 13 of 13 Records

1 Dated: 10-5-2022

Sir, I don't understand how a capital asset is discarded merely because its wdv is zero. The answer to your question is to retain the asset for the full five year period to save input tax

2 Dated: 11-5-2022
By:- Murari Kumar

It is required due to some reason

thanks for your reply

3 Dated: 11-5-2022
By:- Ganeshan Kalyani

ITC for balance year or GST on sale value whichever is higher need to be reversed or paid

4 Dated: 12-5-2022
By:- Murari Kumar

HI, thank for your valuable revert

Please suggest how to pay through 3B or DRC-01

5 Dated: 14-5-2022
By:- Shilpi Jain

If it's of Mar '22 youn can either choose GSTR-3B or DRC-03. For the reason that even if paid in 3b it will get reported in GSTR-9 in part 5.

If done in DRC-03, will get reported in table 4.

6 Dated: 14-5-2022
By:- Shilpi Jain

So either way reporting will happen in GSTR-9

7 Dated: 14-5-2022

As you mention in your query it is discarded.Does it mean you stop using it or discarded means Sale (Supply) or disposed off? if it is sale (Supply) then Sec 18(6) will apply. In my view If it not not supply then section 18(6) will not apply.

8 Dated: 18-5-2022
By:- Murari Kumar

Thanks Shilpi JI.

it is reversal of March 22.

Means we can report in other reversal column in GSTR-3B for Apr 22.

9 Dated: 25-5-2022
By:- Amit Agrawal

Dear Querist,

I am not sure I have understood the context of your query. Can you please explain legal provisions under which you feel that you need to be reverse proportionate ITC? Thanks

10 Dated: 25-5-2022
By:- Murari Kumar

It is against rule 43 1(c)

11 Dated: 25-5-2022
By:- Amit Agrawal

Rule 43 deals with a situation where concerned capital goods attract the provisions of sub-sections (1) and (2) of section 17 being partly used for the purposes of business and partly for other purposes, or partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies.

From the facts shared by you in your query, I an not sure how these the provisions of sub-sections (1) and (2) of section 17 are applicable to you. Can you please elaborate? Thanks

12 Dated: 25-5-2022
By:- Murari Kumar

I Understand but section 43 1(c) says

the amount of input tax in respect of capital goods not covered under clauses (a) and (b), denoted as ‘A, being the amount of tax as reflected on the invoice, shall credit directly to the electronic credit ledger and the validity of the useful life of such goods shall extend upto five years from the date of the invoice for such goods:

Provided that where any capital goods earlier covered under clause (a) is subsequently covered under this clause, input tax in respect of such capital goods denoted as ‘A’ shall be credited to the electronic credit ledger subject to the condition that the ineligible credit attributable to the period during which such capital goods were covered by clause (a),denoted as ‘Tie’, shall be calculated at the rate of five percentage points for every quarter or part thereof and added to the output tax liability of the tax period in which such credit is claimed:

13 Dated: 25-5-2022
By:- Amit Agrawal

As per my understanding of given facts in your query, you are not covered in situation described in Rule 43 (1) (c) including proviso thereunder. Accordingly, I am unable to understand why there is a need to reverse any ITC.

If I missed any factual aspects or you are thinking about any other applicable provisions / rules warranting such proportionate reversal of ITC, please let me know.


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