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Credit on capital goods under itc

Others 260 views 9 replies
X Ltd purchased a machine for Rs 100000 and brought it on 1.8.2018 and paid 12%IGST.He availed input tax credit and used capital goods in his business. On 5.11.2019 he resold it as second-hand machine for 65000.Find out the amount of tax payable/ITC reversible in the above case?
Replies (9)

Have  you  Claim  Depreciation  on Machine  ?. 

No depreciation
Itc claimed -25% of itc claimed or gst applicable on resale of machine,whichever is higher
Useful Life of Asset is 60 months .

The Asset being Used 14 months .
Balance emaining Months 46 (60-14)

Formula : ITC ×Remaining months÷60

12000×46÷60= 9200/-

and sold it at Rs. 65000/- , the output tax on it is 7800/- (12% of 65000/-) .

Hence you need to reverse 9200/- (Higher amount)

(Refer Rule 44(6) of CGST Act)
The answer shows 3600 and 8400
@ Tanvi
can explain me how you got 3600/- & 8400/-

can you explain me how you got 3600/- & 8400/- .....................

Even I'm not able to get this answer
this answer is given in the book

Tax to be reversed is Higher of -

= ITC Taken - 5 % per quarter from date of purchase        or            Tax on Transaction value

= 12000 - 5% x 6 Quarters x 12000                                               =65000 x 12%

=12000-3600

=8400                                                                                              = 7800   

Hence ITC to be reversed is Rs.8400


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