GST related query

Hey Ajnas! Let me break down your GST queries related to ITC reversal on destroyed/damaged/written-off/free sample goods step-by-step:

a) If products worth Rs. 60,000 + 18% GST are destroyed/damaged/written off/free samples out of Rs. 1,20,000 + 18% GST input availed earlier, do you need to reverse ITC? If yes, how much?

• Yes, ITC reversal is required on the value of goods destroyed/damaged/written off/free samples.

• You should reverse ITC proportionate to Rs. 60,000 + 18% GST (not the entire Rs. 1,20,000).

• In simple terms, ITC reversal = ITC proportionate to destroyed/damaged goods only.

b) If input of Rs. 1,20,000 + 18% GST was never claimed (ITC not availed), do you need to reverse ITC now?

• No reversal required because ITC was never claimed.

• Reversal is only for ITC already availed earlier.

c) Is such reversal applicable on fixed assets of the business?

• No, reversal provisions under Section 16(2)(aa) are applicable only on inputs and input services, not on capital goods (fixed assets).

• If fixed assets are destroyed/damaged/written off, no reversal of ITC is required under this specific rule.

• However, if capital goods are sold or scrapped, there might be other provisions for ITC reversal under Section 18(6).

d) If interest is applicable on such ITC reversal, from which date is interest calculated?

• Interest is calculated from the date ITC was wrongly availed till the date of reversal/payment.

• If the reversal is done in a subsequent return, interest applies from the date of taking ITC to the date of reversal.

• If ITC was availed correctly but now needs reversal due to damage/write-off, the interest will be from the date of availing ITC till reversal date.

Summary table:

GST ITC Reversal in Case of Goods Destroyed / Damaged / Written-off / Given as Free Samples

Relevant Law:

• Section 17(5)(h) of CGST Act, 2017 – ITC not available on goods lost, stolen, destroyed, written-off, or disposed of by way of gift or free samples.

• Rule 42 & 43 of CGST Rules, 2017 – Method for reversal calculation.

(a) Out of ₹1,20,000 + 18% GST, ₹60,000 + 18% GST damaged – Reversal?

• ITC sirf us portion ka reverse hoga jo damage/destroy hua hai.

• Example:

  • Purchase GST: ₹1,20,000 × 18% = ₹21,600

  • Damaged portion: ₹60,000 × 18% = ₹10,800

• Reverse ₹10,800 ITC only (plus applicable interest if already utilized).

• Baaki ₹60,000 ka ITC valid hai (kyunki wo goods abhi business me use hue hain).

(b) Agar ₹1,20,000 + 18% GST ka ITC claim hi nahi kiya tha

• Agar aapne input claim hi nahi kiya, to reversal ka sawal hi nahi aata.

• Reason: Reversal tab hota hai jab pehle ITC claim kiya gaya ho aur baad me ineligible condition aa jaye.

(c) Fixed Assets par bhi applicable hai?

• Haan, applicable hai agar asset destroy/damage/write-off ho jata hai.

• Section 17(5)(h) me “goods” word use hua hai jisme capital goods bhi covered hote hain.

• Agar fixed asset partially damage hua to proportionate ITC reversal hoga.

(d) Interest Calculation

• Interest @ 18% p.a. under Section 50(1) lagta hai.

• Interest ka calculation:

  • Date of original ITC utilization se le kar date of reversal/payment tak.

  • Agar ITC claim kiya tha lekin utilize nahi hua, interest nahi lagega — sirf reversal karein.

LegalDev Practical Tip

• Damage/destroy/write-off ka proper stock register & CA-certified calculation maintain karein.

• GST portal me DRC-03 form ka use karke voluntary ITC reversal karein, jisse future notice avoid ho.

• Agar ye free sample hai, to marketing cost ke justification ke liye invoice/cost sheet rakhein.