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ITC ON CAPITAL GOODS

21 April 2019

when capital goods are first purchased and used for both business and personal purpose...how to apportion the ITC for this?

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9 Replies

prasad Nilugal (3914 Points)
Replied 21 April 2019

you have to apply rule 43 of the CGST rules 2017 for apportion of ITC .

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 21 April 2019

Lets Assume if you are supplying both taxable & Exempted supply the ITC attributes to Exempted supply has to be reverse every month in 3b for 60 months.

Take the full ITC on capital Goods in the month you purchased say 6000/-

from Next month The reversal has to be done in following Manner

6000÷60= 100 monthly ITC
Say exempted supply for the month is 10000/- & total supply is 20000/-

ITC attribute to Exempted supply = 100 x 10000÷20000 = 50/-

So have to reverse the 50/- under 3b under Rule 43

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Rakshit Krishnamurthy (46 Points)
Replied 21 April 2019

sir my question is...if a person purchased a capital good and used it for both personal and business purpose from the beginning...and he does not have any exempt supplies also...in such a case how to apportion itc..?

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 22 April 2019

can you clarify the capital goods being Used as personal Purposes , means what is the capital goods , & how it's being used as personal Purposes ????

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Rakshit Krishnamurthy (46 Points)
Replied 22 April 2019

for eg: I am a model registered under gst and I have taxable t/o of 4800000...now I purchased a camera in abroad by paying 500000 and IGST of rs 90000 and this camera is being used for both business and personal purpose..

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 22 April 2019

As per Para 4 Schedule 2 any business asset used for private use without any consideration is considered as supply of Services in GST ,

Hence
It's Taxable , now the value to determine without consideration , the Rule 27 of CGST Act follow , The Open Market Value & if the open market value is not available then be the value of supply of services of like kind & quality.

So as per above valuation Rule we can determine the value of supply used in personal purpose & can apply the above formula for reversal of ITC

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Rakshit Krishnamurthy (46 Points)
Replied 22 April 2019

thank you sir

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PRETEESH JAIN (6 Points)
Replied 22 April 2019

As the gst rules 5% of eligible is deemed towards non business purposes irrespective of actual usage following is the extract: Are used partly for business and partly for non-business purposes, be denoted as ‘D2’, and shall be equal to five per cent. of C2; and