ITC on capital goods
Is ITC on capital goods purchased for business purpose allowed fully in a single tax period or it is spread over 5 years life of the asset?
Replies (2)
spread over 5 years life of the asseet
The amount of ITC (in full) in respect of the capital goods used or intended to be used exclusively for effecting taxable supplies including zero-rated supplies shall be credited to the electronic credit ledger. (For Business Purpose).
ITC in case of capital goods used commonly for exempt and taxable supplies and/or business and non-business purposes. then it spread over 5 years life of the asset.
ITC on Capital Goods available as under:
(1) Capital Goods used only for personal use & exempted sales - NO ITC
(2) Capital Goods used only Normal Taxable sales - ITC allowed
(3) Capital Goods used Partly for Personal/Exempted and Party for Normal sales - Calculate proportionate ITC
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