Sale of Old plant & Machinery on which ITC Taken earlier-Rule 40 or Rule 44
Query (Issue) Started By: – ROHIT GOEL Dated:- 13-6-2018 Last Reply Date:- 21-6-2018 Goods and Services Tax – GST
Got 2 Replies
GST
Hi Sir,
As per sec 18(6) of CGST Act 2017, when capital goods on which ITC has been taken are sold, then the assessee should pay:
a) ITC taken earlier after reduction of prescribed percentage points OR
b) tax on transaction value on sale
whichever is higher.
Further as per Rule 40(2) of CGST Rules:
"(2) The amount of credit in the case of supply of capital goods or plant and machinery, for the purposes of sub-section (6) of section 18, shall be calculated by reducing the input tax on the said goods at the rate o
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useful remaining life in months= 5 months ignoring a part of the month
Input tax credit taken on such capital goods= C
Input tax credit attributable to remaining useful life= C multiplied by 5/60
(6) The amount of input tax credit for the purposes of sub-section (6) of section 18 relating to capital goods shall be determined in the same manner as specified in clause (b) of subrule (1) and the amount shall be determined separately for input tax credit of 3[central tax, State tax, Union territory tax and integrated tax]"
My query is which Rule is to be followed in such case? Whether the credit to be reversed or paid will be determined as 5% per quarter or on the basis of useful life of 60 months since there will be differences in bot
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