CAPITAL GOODS ITC CLAIMED OR CAPITALISED

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For capital goods, if ITC is claimed, the GST amount must be excluded from the asset cost. If ITC is not claimed, the full cost including GST can be capitalized and depreciation claimed on the higher value. The better option depends on the taxpayer's situation.

Viral

Viral (Querist)
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04 June 2026 Dear Sir/Madam,
In case of Purchase Capital Goods.
Whether ITC calimed or Capitalized ?

Pls advice.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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04 June 2026 If ITC is claimed: You reduce your GST liability, but you must exclude the GST amount from the asset's capitalized cost.

If ITC is not claimed: You may capitalize the full cost (including GST) and claim depreciation on that higher base value.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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04 June 2026 You can either claim ITC and exclude the tax from the asset's cost, or choose not to claim ITC and capitalize the entire cost (including GST) to claim depreciation on the higher amount. It is recommended to consult with a professional to determine which option is more advantageous for your situation.

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