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RULE 43 IN GST EFFECT IN INCOME TAX

132 views 1 replies

Ajnas

Student

844 Points Joined April 2020

The doubt is in case of capital asset for Rs.1 lac+ GST Rs.18000/-, capitalised in2018-19 for Rs.1 lac for which depreciation is claimed and Rs.18000/- taken to current asset as Input Tax receivable.

We have decided to reverse the ITC of Rs.18000/- as per GST rule 43 (itc reversal for capital goods) in 2019-20 to the asset account. Whether we have to take the entire amount of Rs.18000/- to the asset account and claim deprecaition for the same or we have to take Rs.18000/- as addition and take the depreciation of Rs.1800/-( @ 10%) to prior period expenses and reduce the opening WDV to Rs90000+16800/- and show accordingly. Please also advise how the same to be shown for calculating the depreciation allowable as per rules for the year 2019-20, since the addition of Rs.18000/- pertains to the year 2018-19.

Replies (1)

veerendar singh

tax consultant

3306 Points Joined October 2018

As per rule 43 i think its not possible to reverse entire 18000 itc. there would always be a portion which will be allowed as itc and the balance will be reversed as per formula given in rule 43.

but anyhow you have brought back the input gst to increase the cost of asset then it would be treated as addition to the block. it is not a prior period item. you can take depreciation on itc reversal from this year onwards at the rate applicable to the respective block.