Goods and Services Tax

Sale of Old plant & Machinery on which ITC Taken earlier-Rule 40 or Rule 44

Goods and Services Tax – Started By: – ROHIT GOEL – Dated:- 13-6-2018 Last Replied Date:- 21-6-2018 – Hi Sir, As per sec 18(6) of CGST Act 2017, when capital goods on which ITC has been taken are sold, then the assessee should pay: a) ITC taken earlier after reduction of prescribed percentage points OR b) tax on transaction value on sale whichever is higher. Further as per Rule 40(2) of CGST Rules: (2) The amount of credit in the case of supply of capital goods or plant and machinery, for the purposes of sub-section (6) of section 18, shall be calculated by reducing the input tax on the said goods at the rate of five percentage points for every quarter or part thereof from the date of the issue of the invoice for such goods. However, Rule

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to remaining useful life= C multiplied by 5/60 (6) The amount of input tax credit for the purposes of sub-section (6) of section 18 relating to capital goods shall be determined in the same manner as specified in clause (b) of subrule (1) and the amount shall be determined separately for input tax credit of 3[central tax, State tax, Union territory tax and integrated tax] My query is which Rule is to be followed in such case? Whether the credit to be reversed or paid will be determined as 5% per quarter or on the basis of useful life of 60 months since there will be differences in both of the two methods? – Reply By Alkesh Jani – The Reply = Sir, In my point of view, in your case Rule 40(2) of CGST Rules, 2017 is applicable, as it is with r

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