BLOG on Income Tax Management for - AY 2022-23 & 2023-24

Determination Of Input Tax Credit (ITC) In Respect Of Capital Goods (Rule-7 of ITC Rules)

Rule 8 of the ITC Rules provides for manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases.

Rule 8 of ITC Rules :

Step No.1: Attribution of Total Input Tax Credit in respect of capital goods and transfer to e-credit ledger

Note:- Useful life of such goods shall be taken as five years from date of invoice.

Step No.2: Computation of amount of ITC Reversal from Common Credit

A. In respect of input tax credit attributable towards exempt supplies

Note: - Where the registered person does not have any turnover during the said tax period, then such value shall be calculated using the value of last tax period for which turnover are available.

Calculation of common credit pertaining to capital good will be done as paras (c), (d) and (e) of rule 8 of the ITC Rules.

Step No. 3 : Total Eligible Input Credit

Input Credit transfer to e-credit ledger under Step No.1 minus (-) amount of ITC reversal required under Step No. 2.

Note:

1. The total amount eligible for input credit shall be computed separately for input tax credit of Central tax, State tax, Union territory tax and integrated Tax.

Related Topics ....

Conditions For Taking ITC ( Input Tax Credit) under GST

Limitations On Availing ITC (Input Tax Credit) under GST

Determination Of Input Tax Credit (ITC) In Respect Of Inputs Or Input Services ( Rule-7 of ITC Rules)

Determination Of Input Tax Credit (ITC) In Respect Of Capital Goods (Rule-7 of ITC Rules)

Restrictions On Availing ITC ( Input Tax Credit ) under GST

Utilizing Input Tax Credit (ITC) in respect of IGST, CGST, Cess and SGST/UTGST

Availability Of Input Tax Credit (ITC) In Certain Special Circumstances under GST

Transfer, Reversal Of Input Tax Credit (ITC) Under GST

Distribution Of Credit By Input Services Distributor (ISD) under GST

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