Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases under GST

Rule-43 of CGST Rules 2017

43. Man­ner of deter­mi­na­tion of input tax cred­it in respect of cap­i­tal goods and rever­sal there­of in cer­tain cas­es.- (1) Sub­ject to the pro­vi­sions of sub-sec­tion (3) of sec­tion 16, the input tax cred­it in respect of cap­i­tal goods, which attract the pro­vi­sions of sub-sec­tions (1) and

• of sec­tion 17, being part­ly used for the pur­pos­es of busi­ness and part­ly for oth­er pur­pos­es, or part­ly used for effect­ing tax­able sup­plies includ­ing zero rat­ed sup­plies and part­ly for effect­ing exempt sup­plies, shall be attrib­uted to the pur­pos­es of busi­ness or for effect­ing tax­able sup­plies in the fol­low­ing man­ner, namely,- 
  • the amount of input tax in respect of cap­i­tal goods used or intend­ed to be used exclu­sive­ly for non-busi­ness pur­pos­es or used or intend­ed to be used exclu­sive­ly for effect­ing exempt sup­plies shall be indi­cat­ed in FORM GSTR‑2 and shall not be cred­it­ed to his elec­tron­ic cred­it ledger;
  • the amount of input tax in respect of cap­i­tal goods used or intend­ed to be used exclu­sive­ly for effect­ing sup­plies oth­er than exempt­ed sup­plies but includ­ing zero-rat­ed sup­plies shall be indi­cat­ed in FORM GSTR‑2 and shall be cred­it­ed to the elec­tron­ic cred­it ledger;
  • the amount of input tax in respect of cap­i­tal goods not cov­ered under claus­es (a) and (b), denot­ed as ‘A’, shall be cred­it­ed to the elec­tron­ic cred­it ledger and the use­ful life of such goods shall be tak­en as five years from the date of the invoice for such goods:

Pro­vid­ed that where any cap­i­tal goods ear­li­er cov­ered under clause (a) is sub­se­quent­ly cov­ered under this clause, the val­ue of ‘A’ shall be arrived at by reduc­ing the input tax at the rate of five per­cent­age points for every quar­ter or part there­of and the amount ‘A’ shall be cred­it­ed to the elec­tron­ic cred­it ledger;

Expla­na­tion.- An item of cap­i­tal goods declared under clause (a) on its receipt shall not attract the pro­vi­sions of sub-sec­tion (4) of sec­tion 18, if it is sub­se­quent­ly cov­ered under this clause.

• the aggre­gate of the amounts of ‘A’ cred­it­ed to the elec­tron­ic cred­it ledger under clause ©, to be denot­ed as ‘Tc’, shall be the com­mon cred­it in respect of cap­i­tal goods for a tax period:

Pro­vid­ed that where any cap­i­tal goods ear­li­er cov­ered under clause (b) is sub­se­quent­ly cov­ered under clause ©, the val­ue of ‘A’ arrived at by reduc­ing the input tax at the rate of five per­cent­age points for every quar­ter or part there­of shall be added to the aggre­gate val­ue ‘Tc’;

• the amount of input tax cred­it attrib­ut­able to a tax peri­od on com­mon cap­i­tal goods dur­ing their use­ful life, be denot­ed as ‘Tm’ and cal­cu­lat­ed as-

Tm= Tc÷60

• the amount of input tax cred­it, at the begin­ning of a tax peri­od, on all com­mon cap­i­tal goods whose use­ful life remains dur­ing the tax peri­od, be denot­ed as ‘Tr’ and shall be the aggre­gate of ‘Tm’ for all such cap­i­tal goods;
• the amount of com­mon cred­it attrib­ut­able towards exempt­ed sup­plies, be denot­ed as ‘Te’, and cal­cu­lat­ed as-

Te= (E÷ F) x Tr

where,

‘E’ is the aggre­gate val­ue of exempt sup­plies, made, dur­ing the tax peri­od, and ‘F’ is the total turnover of the reg­is­tered per­son dur­ing the tax period:

Pro­vid­ed that where the reg­is­tered per­son does not have any turnover dur­ing the said tax peri­od or the afore­said infor­ma­tion is not avail­able, the val­ue of ‘E/F’ shall be cal­cu­lat­ed by tak­ing val­ues of ‘E’ and ‘F’ of the last tax peri­od for which the details of such turnover are avail­able, pre­vi­ous to the month dur­ing which the said val­ue of ‘E/F’ is to be calculated;

Expla­na­tion.- For the pur­pos­es of this clause, it is here­by clar­i­fied that the aggre­gate val­ue of exempt sup­plies and the total turnover shall exclude the amount of any duty or tax levied under entry 84 of List I of the Sev­enth Sched­ule to the Con­sti­tu­tion and entry 51 and 54 of List II of the said Schedule;

• the amount Te along with the applic­a­ble inter­est shall, dur­ing every tax peri­od of the use­ful life of the con­cerned cap­i­tal goods, be added to the out­put tax lia­bil­i­ty of the per­son mak­ing such claim of

(2) The amount Te shall be com­put­ed sep­a­rate­ly for cen­tral tax, State tax, Union ter­ri­to­ry tax and inte­grat­ed tax.