DEPRECIATION ON CAPITAL GOODS WITH GST COMPONENT, Goods and Services Tax - GST

[Sadanand Bulbule]

Dear experts

Section 16[3] of the CGST Act reads as under:

(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax component shall not be allowed.

It means, to claim ITC, registered person has to claim depreciation on the value of the capital goods purchased without including the GST paid.

In view of this , what would be implications on Section 17[5][d] in terms of recent judgement of Hon'ble Supreme Court in Safari Retreat case?

My understanding is, taxpayers falling under 16[3] cannot claim the benefit of " ITC " under Section 17[5][d].

There are some such instances claiming both depreciation and ITC without anticipating backfire from the department.

Your validations plz.

Posts / Replies

[Sadanand Bulbule]

Section 2[19] defines as under:

(19) “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business;