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Gst of fixed assets

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Abhishek Selvam O

258 Points Posted on 16 August 2020

If a vehicle has been pirchased for 100000 for transportation of persons and gst-18000 it is ineligible credit can we claim depreciation for 118000 or we have to claim for 100000 only?

Replies (2)

Quick Summary

This discussion clarifies the GST treatment for fixed assets, particularly vehicles purchased for business use. If the GST paid on a vehicle is ineligible for input tax credit (ITC) under Section 17(5) of the GST Act, you can still claim depreciation on the full purchase price, including the GST amount. This means you can claim depreciation on the total cost of £118,000 rather than just the base price of £100,000.

Raj Chaurasia

195 Points Posted on 16 August 2020

Itc on vehicle having passenger capacity upto 13 is blocked under sec 17(5). So itc is ineligible in your case.

Now since itc is blocked u can take deprecation upon gst component as per sec 16(3). So u can claim depreciation in 118000.

Sagar Patel

Tax and Business Consultant

5533 Points Posted on 16 August 2020

As per provision, GST can be claimed for vehicles only if (i) they are bought for resale, and (ii) they are bought for use in transporatation of passengers(Sub.to conditions) / Goods; (iii) they are bought for use in teaching of driving such vehicles.

So, if you are not doing business of transportation of passanger, than its blocked credit u/s 17(5). You can't take ITC.

As you have not taken ITC, you can capitalised full amount 1,18,000 to vehicles account, and can claim depreciation on 1,18,000/- @ prescribed%.