ITC on Capital Goods -

Originally posted by : sabyasachi mukherjee
	Input tax credit to reverse itc

Mr. Sabyasachi,

Can you give clarification for the reverse of ITC...???

Mr Sabyasachi,

Better to read what is ITC, What is capital goods, what is furtherance of business, What is GST ITC, what/when/which condition reverse the ITC....

After that come back with minimum knowledge... Flat read not possible to act professional...

Originally posted by : sabyasachi mukherjee
	First read then react. I am quite aware of these facts.

Sssss I know Your aware...

No need to reverse the ITC. Its a part of Machinery, and no where else written that to capitalize in GST Act. Also if, we have not capitalized any Plant and machinery it is not required to reverse the ITC. 

Originally posted by :
	The queries has not mentioned whether it's put to use or not.ssss if you do not know do not comment.

Wowww what a logic dearrr...

Yesssss, I forgot it the machinery put to use or not since FY 20-21, FY 21-22, FY22-23, FY23-24...

Ohhh God I really forgot it, still it's not put to use...

Thanks for the remaining part of this...

Capitalisation is only restricted on construction services in terms of renovation, alterations etc.

Due to nocapitalisation of machinery, ITC needs not to be reversed. ITC can be availed subject to fulfillment of all other conditions of Section 16 of CGST

The rule for ITC on capital goods was simplified by the GST (Amendment) Act 2018, and as amended, the 5-installment restriction has been removed.

Current rule (post-2022):
- Full ITC is available in the year of purchase for most capital goods
- The credit appears in GSTR-2B and must be accepted in IMS (mandatory from April 2026) before claiming in GSTR-3B
- The goods must be used in the course of business (Section 16(1) condition)

What is blocked under Section 17(5):
- ITC is not available on motor vehicles with seating capacity up to 13 persons (exceptions: taxis, driving schools, vehicles used for transportation of goods)
- ITC is not available on capital goods used solely for making exempt supplies
- ITC on construction and immovable property (plant and machinery is an exception if capitalised)

Partial use rule:
- If the capital goods are used for both taxable and exempt supplies, you must compute the proportionate ITC using the formula in Rule 43 and reverse the ineligible portion annually.

Post-IMS note: From April 2026, ITC on capital goods (and all inward supplies) must be accepted in IMS before claiming. If the supplier invoice does not appear in IMS, the credit is at risk even if the goods qualify.

For the full reconciliation process and the Rule 43 computation, see this [GST ITC eligibility and GSTR-2B reconciliation guide](https://taxgarden.in/blog/gst-input-tax-credit-eligibility-gstr-2b-reconciliation).