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ITC on ship repair (Dry Dock)

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E.KALAIKOVAN

Sr. Accounts Manager

352 Points Posted on 01 November 2021

Sir,

ITC on Capital goods (Ship/Vessel) is eligible for Transport of Coastal goods. In Shipping, Every 2 1/2 years ships/vessels are to be reparied. This is mandatory. The capital expenditure will be accounted as Dry Dock. This will written off 2 1/2 years. \

ITC on capaital goods is for 5 years (60 months). Dry dock is for 2 1/2 years, ITC on Dry Dock is eligible?

Replies (5)

Quick Summary

This discussion explores the eligibility of Input Tax Credit (ITC) on capital expenditure for ship dry dock repairs. The user questions whether ITC on dry dock costs, which are written off over 2.5 years, qualifies for the 5-year ITC period applicable to capital goods. The response clarifies that ITC on capital goods is generally claimable if used for business furtherance and subject to Section 17(5) exclusions, with the 5-year period relating to asset disposal. Crucially, mandatory dry dock repairs are essential for a ship's operation, suggesting potential eligibility.

Rajendra Prasad

Employee Private

1913 Points Posted on 02 November 2021

ITC on capital goods, can be claimed if it used for the furtherance of Business and subject to Section 17(5) eligibility.
Further the 5 years situation will comes valuation of asset when you are desposing off.

E.KALAIKOVAN

Sr. Accounts Manager

352 Points Posted on 02 November 2021

Sir,

Dry Dock cost will be written off in 2 1/2 years. Without the Dry Dock repair, ship can not be taken into business.

Rajendra Prasad

Employee Private

1913 Points Posted on 02 November 2021

That is not in eligible criteria.
To avail Input credit required Tax Invoice, receipt of Goods or services or both, and supplier has to be file returns.