GST Payable on sales of capital goods

This query is : Resolved

yogesh mahajan (Querist)
Follow

17 November 2019 Dear Experts,

I have kept some business assets ( Furniture, Electrical installation, Tools & equipment and cars) in my books of account, now i want to closed my business and sold above assets, Above assets purchase before GST regime and claimed MVat & central excise and as per tax audit block of above assets is nill. I have purchase furniture in FY-10-11 and till date wdv is-1.36 lakh as per books & as per income tax, and electrical installation & car purchase in FY 10-11 and wdv as per books is 5.55 lakh but as per Income tax wdv is nill, Tools & Equipment purhcase in FY-12-13 and wdv is-1.95 lakh as per books and as per it wdv is nill. I want to sale above assets, so how i can calculate GST payable on above assets, In case of Car I have not taken Central excise & M Vat credit.

Thanks & Regards

CA Anita Bhadra

CA Anita Bhadra (Expert)
Follow

17 November 2019 GST is payable on sale of capital goods .

As per schedule II of CGST Act 2017 -goods forming part of the assets of a business are transferred or disposed of by or under the directions of the person carrying on the business so as no longer to form part of those assets, whether or not for a consideration, such transfer or disposal is a supply of goods by the person;
It does not matter whether: Goods belong to Pre GST era or Post GST era

Now , the value on which GST is to be calculated is to be ascertained .
ITC on Unutilised portion of capital Asset need to be considered for calculation . For the purpose , life of capital Asset is assumed to be 5 years ( In your case , 5 year is already over , so in my view ITC availed will not have any effect on your GST calculation liability )

In all you other Asset GST will be simply applicable % ( 18%) on sales consideration .

For Car - Vide Notification 8/2018- Central Tax (Rate) dated 25 January 2018, the margin scheme was made applicable to all taxpayers on the sale of motor vehicle held as capital asset. In this regard, GST has to be paid on the excess of selling price over the written down value as per the Income Tax Act, 1961, where depreciation has been claimed by the taxpayer. Where no depreciation has been claimed, GST shall be paid on the difference in the selling price and the purchase price.

For more details , refer :-
https://taxguru.in/goods-and-service-tax/sale-capital-goods-gst-regime.html

yogesh mahajan

yogesh mahajan (Querist)
Follow

17 November 2019 Thanks Anita Madam,

But i have query regarding Car, I have not taken ITC ( Mvat & C.Excise ) against car purchase, so i will liable or not liable against sales of Car

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

27 July 2024 When you sell business assets like furniture, electrical installations, tools, and equipment, including cars, under the GST regime, certain considerations need to be addressed to determine if GST is payable and, if so, how much. Here’s a breakdown of how to handle GST on the sale of these assets:

### General GST Considerations on Sale of Capital Goods

1. **GST on Sale of Capital Goods:**
- **Taxable Supply:** The sale of capital goods is considered a taxable supply under GST. Since you are selling business assets, GST is applicable on the sale of these assets.

2. **Calculation of GST Payable:**
- **Rate of Tax:** The GST rate on the sale of capital goods typically depends on the type of asset and its HSN code. For furniture, electrical installations, tools & equipment, and cars, the GST rates can be different. Generally:
- **Furniture:** 18% GST
- **Electrical Installations:** 18% GST
- **Tools & Equipment:** 18% GST
- **Cars:** 28% GST (Note: For cars, there might be additional cess applicable)

3. **Input Tax Credit (ITC) Implications:**
- **No ITC Claimed:** If you have not claimed ITC on the assets, GST payable on the sale of these assets is calculated on the sale value without considering ITC.
- **For Goods Where ITC Was Claimed:** If ITC was claimed on the purchase of assets, you need to reverse the ITC proportionate to the WDV (Written Down Value) at the time of sale.

4. **Specific Case for Cars:**
- **No ITC Claimed:** Since you have not claimed any ITC on the car, you are still required to pay GST on the sale of the car. The GST is calculated based on the sale value of the car at the applicable rate (28% GST plus any cess).

### Steps to Calculate GST Payable

1. **Determine the Sale Value:**
- Establish the sale value of each asset (furniture, electrical installations, tools & equipment, and car).

2. **Apply the Applicable GST Rate:**
- Apply the respective GST rate based on the type of asset.

3. **For Cars Specifically:**
- Since no ITC was claimed, you need to charge GST at 28% plus cess on the sale value of the car.

4. **Invoice and GST Returns:**
- Issue a GST invoice for the sale of these assets, including the GST amount.
- Report the sale and GST collected in your GST returns.

### Example Calculation

Let's assume the sale values of the assets are as follows:

- **Furniture:** ₹1L
- **Electrical Installation:** ₹2L
- **Tools & Equipment:** ₹2.50L
- **Car:** ₹5L

#### GST Calculation:

1. **Furniture:**
- Sale Value: ₹1L
- GST Rate: 18%
- GST Payable: ₹1L × 18% = ₹18K

2. **Electrical Installation:**
- Sale Value: ₹2L
- GST Rate: 18%
- GST Payable: ₹2L × 18% = ₹36K

3. **Tools & Equipment:**
- Sale Value: ₹2.50L
- GST Rate: 18%
- GST Payable: ₹2.50L × 18% = ₹45K

4. **Car:**
- Sale Value: ₹5L
- GST Rate: 28%
- GST Payable: ₹5L × 28% = ₹1.40L (plus cess, if applicable)

### Important Points:

- **No ITC Claimed:** Since you did not claim ITC, you don't need to worry about reversing ITC, but GST is payable on the sale value.
- **Invoice Issuance:** Ensure that you issue proper GST invoices for the sale of these assets.
- **Compliance:** File the GST returns accurately reflecting the GST collected on the sale of these assets.

### References and Legal Provisions:

- **Section 15:** Provides the value of supply, including the sale of capital goods.
- **CGST Act, 2017:** Deals with the applicable GST rates and procedures.
- **Notification No. 1/2017-Central Tax (Rate) and other relevant notifications:** Provides the GST rates for various goods.

For specific cases, especially with complex asset sales, consulting a GST advisor or tax professional is advisable to ensure compliance and accurate GST calculations.