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ITC ON CAPITAL GOODS

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Himanshu Agarwal

Proprietor

186 Points Posted on 19 September 2020

Mr X purchases a machine with ITC OF Rs 1000.
Output Tax Liability-900
I want to know whether ITC On capital goods can be availed fully at once or not.
for above example Can I claim full 900 from 1000 balance or not

Replies (2)

Quick Summary

This discussion clarifies the rules around claiming Input Tax Credit (ITC) on capital goods. It confirms that the full ITC on capital goods can be claimed at once, similar to other inputs, with no restrictions on instalment-based availment. However, it notes that if depreciation is claimed on the tax component of capital goods under the Income Tax Act, that specific tax component's ITC cannot be claimed.

Deepak Gupta

CA Student

15932 Points Posted on 19 September 2020

Credits for capital goods are available in full.

There is no provision stipulating availment of capital goods credit in instalment or tranches.

Further, if the tax payer claims depreciation of the tax component in the value of capital goods under the provisions of Income Tax Act, then credit is not allowed on such tax component of capital goods.