ITC Liability on Capital Goods on death of Proprietor (GTA)

This query is : Resolved

Rakesh Sharma (Querist)
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28 August 2025 Respected Sir,

One of our client GTA was providing services under forward charges @12% & having 5 Lorries which have purchased in May-2022. But Unfortunately, proprietor died in July-25, now we have applied for closure of this business as family don't want to continue.
Sir, my query is that : should we reverse the ITC taken on above lorries by reducing the ITC amount 5% per quarter basis and we have to pay 35% of ITC availed (ITC Availing time 3 years + 1 Quarter = 13 Quarter i.e. 65%)? Or we can avail any exemption in this exceptional case.

Kindly Advise.

Rakesh Sharma

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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07 September 2025 Under GST, when a registration is canceled, ITC on capital goods must be reversed using the formula under Rule 44 of the CGST Rules.
The formula requires reducing the ITC amount by 5% for every quarter or part thereof from the date of purchase.
Yes, you must pay back 65% of the availed ITC, and can retain 35% at closure.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 September 2025 Good luck....

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