ITC ON CAPITAL ASSET

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Avinash Jeevan Dsouza

Accounts Officer & In charge

3308 Points Joined August 2014

My friend has started the new start up and he has purchased the machinery, He has paid 20,00,000 + GST 18% 3,60,000 = 23,60,000- purchases on 01-11-2020. Sales started from 05-11-2020. Total sales is 8,00,000 + 5% 40,000.00 = 8,40,000. ITC purchase is 4,00,000 + 5% 20,000.00. He has registed for GST on 01-9-2020. He has fillied NIL return for the month of Sep and Oct.

1. Can he claim the ITC of Rs 3,60,000 at the first month of the filing the GSTR 3B?

Outward GST : 40,000.00

Inward GST : 20,000.00

Net Payable : 20,000.00

Less : ITC on Cpiatl goods : 3,60,000.00

ITC c/f : 3,40,000.00

2. Can he capitalize the asset and claim depreciation on the same?

3. Is there any other restrction on the claiming the ITC on capital asset?

Replies (3)

varun

study

52 Points Joined August 2016

If u capitalised the GST portion on capital asset and claiming depreciation , then u r not eligible to claim ITC on that capital asset...
If u claim ITC u r not eligible to deduct depreciation on TAX AMOUNT..

Abhishek Selvam O

374 Points Joined December 2017

1.first option is current
2.if capitalised depreciation can be claimed but not itc
3.if machine purchased for supplying exempt supplies itc cannot claim and has to be capitalised and claim depreciation if machine purchased for profucing exempt and taxable supplies itc can be claimed in propotionate basis.

Vijayprakash P

1313 Points Joined July 2018

Where the registered person has claimed depreciation on the tax component of the cost of the capital goods and plant and machinery under the provision of IT Act1961, the ITC on the said tax component shall not be allowed.