ITC on capital goods utilization

Firstly, since you have given that the truck is going to be used for business purposes only, it implies that full ITC on it is eligible to be claimed.

Coming to the treatment of ITC - There are two approaches that can be followed.

Option 1 - Claim full ITC on the truck and do not claim depreciation on the ITC component. For example, if the truck costs Rs. 30,00,000 and GST at 18% rate comes to Rs. 5,40,000. You can claim the 5.40 Lakh as ITC, Capitalize 30 Lakh as the cost of asset in your books and charge depreciation on the same.

Option 2 - Do not claim ITC on the truck and claim depreciation on the cost of the truck including the ITC component. Considering the same example as above, since ITC is not being claimed, the total cost of the asset is now Rs. 35,40,000 including GST component, and depreciation will be charged on this amount.

You can follow either of the two options.

If you decide to take the first option, you can claim the entire ITC in GSTR3B, there is no need to amortize the ITC over 60 months.

Thank You sir,

So from the above example if I choose option 1, and availe the ITC on october GSTR-3B,can I use the entier ITC of Rs 5.4 lakhs to pay off my GST liability of Rs 7 lakhs for the month of october? ie Utilize ITC 5.4 lakhs and by cash 1.6 lakhs?

Yes sir, that is correct.