Manner of reversal of credit under special circumstances under GST

Rule-44 of CGST Rules 2017

44. Man­ner of rever­sal of cred­it under special — 

(1) The amount of input tax cred­it relat­ing to inputs held in stock, inputs con­tained in semi-fin­ished and fin­ished goods held in stock, and cap­i­tal goods held in stock shall, for the pur­pos­es of sub-sec­tion (4) of sec­tion 18 or sub-sec­tion (5) of sec­tion 29, be deter­mined in the fol­low­ing man­ner, namely,-

• for inputs held in stock and inputs con­tained in semi-fin­ished and fin­ished goods held in stock, the input tax cred­it shall be cal­cu­lat­ed pro­por­tion­ate­ly on the basis of the cor­re­spond­ing invoic­es on which cred­it had been availed by the reg­is­tered tax­able per­son on such inputs;
• for cap­i­tal goods held in stock, the input tax cred­it involved in the remain­ing use­ful life in months shall be com­put­ed on pro-rata basis, tak­ing the use­ful life as five

Illus­tra­tion:

Cap­i­tal goods have been in use for 4 years, 6 month and 15 days.

The 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

• The amount, as spec­i­fied in sub-rule (1) shall be deter­mined sep­a­rate­ly for input tax cred­it of cen­tral tax, State tax, Union ter­ri­to­ry tax and integrated
• Where the tax invoic­es relat­ed to the inputs held in stock are not avail­able, the reg­is­tered per­son shall esti­mate the amount under sub-rule (1) based on the pre­vail­ing mar­ket price of the goods on the effec­tive date of the occur­rence of any of the events spec­i­fied in sub-section
• of sec­tion 18 or, as the case may be, sub-sec­tion (5) of section
• The amount deter­mined under sub-rule (1) shall form part of the out­put tax lia­bil­i­ty of the reg­is­tered per­son and the details of the amount shall be fur­nished in FORM GST ITC-03, where such amount relates to any event spec­i­fied in sub-sec­tion (4) of sec­tion 18 and in FORM GSTR-10, where such amount relates to the can­cel­la­tion of
• The details fur­nished in accor­dance with sub-rule (3) shall be duly cer­ti­fied by a prac­tic­ing char­tered accoun­tant or cost
• 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 sub-rule (1) and the amount shall be deter­mined sep­a­rate­ly for input tax cred­it of cen­tral tax, State tax, Union ter­ri­to­ry tax and inte­grat­ed tax:

Pro­vid­ed that where the amount so deter­mined is more than the tax deter­mined on the trans­ac­tion val­ue of the cap­i­tal goods, the amount deter­mined shall form part of the out­put tax lia­bil­i­ty and the same shall be fur­nished in FORM GSTR‑1.