TMI BlogCapital Goods ITC claimX X X X Extracts X X X X X X X X Extracts X X X X ..... Suppose a capital good (purely for business purpose) is purchased for 80,000. on 1.4.2018. So CGST part will be 7200. We avail 1/5 part (1440) for current year and put reversal entry of 5760. Now, in next year we claim next 1/5 part (1440). My question: 1. Do we claim next year ITC on 1.4.2019 or 31.3.2020 (ie exactly 1 year after purchase or at the end of next FY) 2. Under which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section of GST, do we claim ITC of next year. 3. Under which section of GST, do we enter reversal enter of current year. Please advise. - Reply By KASTURI SETHI - The Reply = Restriction of one year is for availment and not for utilization. Can be used at any time. When you can take full credit in first year why do you want to follow such practice of reversal ? What is the purpose behi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd reversal ? - Reply By DR.MARIAPPAN GOVINDARAJAN - The Reply = Kasthuri Sir, you mentioned that credit should be availed within one year but may be utilized indefinitely. This is the new concept I heard. Any support please. - Reply By narendra patel - The Reply = Sir, Till now I was taking full ITC for Capital Goods in a single year, but recently saw at many places on internet that we can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t take full ITC credit in a single year. We have to divide total ITC of Capital Goods by 5 ( as life of machinery is considered 5 years) and take 1/5 ITC credit each year. Hence I asked this question. Please advise. - Reply By KASTURI SETHI - The Reply = Dear Querist, You can take full ITC on capital goods in one year. Reversal (you are talking) is required on account of usa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of tax paid inputs/capital goods in the business or furtherance of business in respect of exempted as well as taxable supply of goods or services. Are you engaged in exempted as well as taxable supply ? - Reply By KASTURI SETHI - The Reply = Dr.Govindarajan Ji, Sir, What I want to say is as under :- During pre-GST era, Cenvat Credit on capital goods was allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 50% in first financial year and balance (50% ) in next financial year. In GST regime, ITC on capital goods can be taken in full in one year. (year of purchase). Earlier condition of taking credit in two installments has been dispensed with under GST. Secondly, ITC taken within stipulated period, can be utilized in any year after taking credit. Bar of one year is on taking the credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t within one year and not on using the credit. Case laws can be easily traced out but pertaining to pre-GST era i.e.Central Excise. - Reply By KASTURI SETHI - The Reply = Dear Querist, Also read Section18 (6) of CGST Act, 2017. - Reply By Alkesh Jani - The Reply = Sir, In addition to the views expressed by our experts, You are also requested to ensure the applicability of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 40 , 42 , 43 and 44 of CGST Rules, 2017 ,in your case. Thanks, With Regards, - Reply By narendra patel - The Reply = Sir, So from your views it seems I can take FULL ITC in the same year in which I buy machinery (Capital Goods). Thank you very much. If my conclusion from above discussion is wrong, please advise. - Reply By Shashank Mutha - The Reply = Respected kastu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Sethi Govindrajan ji I think that if we charge depreciation on capital goods at the end of financial year than we can't avail ITC . I refer Sec 17 (5) of CGST Act about BLOCK CREDIT If I am wrong than kindly guide us Thank you (waiting for reply) - Reply By Shashank Mutha - The Reply = # DR.MARIAPPAN GOVINDARAJAN - Reply By Shashank Mutha - The Reply = # KASTURI S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ETHI - Reply By Ganeshan Kalyani - The Reply = In case of capital goods used for taxable goods then full credit can be taken in one year. And in case of capital goods used partially for business and partially for other purpose or partially for taxable goods and partially for exempted goods then Rule 43 of CGST Rules , will apply. In this case, the life of an asset is assumed to be 5 years. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, the common capital credit will be taken in five installment spread in five years. - Capital Goods ITC claim - Query Started By: - narendra patel Dated:- 18-5-2018 Goods and Services Tax - GST - Got 12 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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