ITC REVERSE ON CAPITAL GOODS IF UTILISE FULLY
This query is : Resolved
20 May 2026
Where ITC on capital goods is fully utilise in 4 years, is liability arise for reversal of ITC on capital goods??
If yes as per which provision?
If monthly ITC utilise is more than ITC reverse which is only of capital goods ??
than which action to be taken according to law?
If yes as per which provision?
If monthly ITC utilise is more than ITC reverse which is only of capital goods ??
than which action to be taken according to law?
20 May 2026
Reversal Obligation: Yes, liability arises. Under Rule 43 of the CGST Rules, capital goods have a statutory life of 5 years (60 months). Utilizing the ledger balance in 4 years does not exempt the asset from reversal if it is used for exempt/non-business purposes in the 5th year.
Procedural Action: No structural changes are needed if utilization is higher than the reversal. Simply calculate the monthly proportionate reversal ($T_m$), declare it in Table 4(B)(1) of GSTR-3B, and maintain an asset-wise ITC tracker for audit safety.
Procedural Action: No structural changes are needed if utilization is higher than the reversal. Simply calculate the monthly proportionate reversal ($T_m$), declare it in Table 4(B)(1) of GSTR-3B, and maintain an asset-wise ITC tracker for audit safety.
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