How to Show GST Implication of Sale of Fixed Asset in GST Return, Goods and Services Tax - GST

[Roshan Chaudhary]

A Capital Asset is Purchased At 590000 in which 90000 is GST, and after 1 year 2 Month, the Capital Asset Sold at 350000 without Tax (GST rate is 18% on the Sale). We Have to Reverse the Input tax Credit based on 5% quarter. How will we show the transaction in GSTR-1 and GSTR-3B

Posts / Replies

[Sadanand Bulbule]

Read the break-up details of Box No. 3 & 4 of the GSTR-3B carefully.

[YAGAY andSUN]

In continuation of the above reply, following revert may also be useful for you in the aforesaid matter: 

As per our Understanding of this matter you're tackling an important GST ITC reversal requirement when capital goods are sold before the end of their useful life (5 years = 20 quarters). Let’s break it down step by step and explain both the ITC reversal calculation and how to report this in GSTR-1 and GSTR-3B.

🔍 Scenario Summary:

Item	Value
Purchase Value	₹5,90,000
GST Paid (ITC availed)	₹90,000 (18%)
Time Held Before Sale	1 year 2 months = ~5 quarters
Capital Goods Sold At	₹3,50,000 (no GST charged)
GST Rate on Sale	18%
Sale is Without GST	Hence ITC Reversal Required

🧮 Step-by-Step ITC Reversal Calculation (as per Rule 44(6) of CGST Rules)

If capital goods are sold without tax, ITC reversal is required using the 5% per quarter rule.

1. Total Quarters of Usage:

• 1 year 2 months = 5 quarters

2. Number of Remaining Quarters (out of 20):

• Total useful life: 5 years = 20 quarters
• Used: 5 quarters
• Remaining: 15 quarters

3. ITC to be Reversed:

• Reversal = (5% of ITC per quarter) × remaining quarters
• Reversal = 5% × 15 = 75% of ₹90,000
• = ₹67,500

👉 ₹67,500 needs to be reversed as ITC since the sale is made without charging GST.

📤 How to Show in GSTR-3B

In GSTR-3B, ITC reversal is reported in Table 4(B)(2):

🔸 Table 4(B)(2): "Others" – ITC Reversed

Particulars: Others

Amount: ₹67,500

This will reduce your total available ITC for the month.

📄 How to Show in GSTR-1

Since the capital asset is sold without tax, this is considered a non-GST/outward exempted supply. You need to report it in Table 8 of GSTR-1:

🔸 GSTR-1 → Table 8: Nil Rated, Exempted and Non-GST outward supplies

Nature	Taxable Value	Integrated Tax	Central Tax	State/UT Tax
Exempted Outward Supply	₹3,50,000	0	0	0

👉 You're not charging GST, so report the value as exempted outward supply here.

✅ Summary:

Action	Reporting
Reverse ITC (₹67,500)	GSTR-3B → Table 4(B)(2) – “Others”
Sale of asset (₹3,50,000)	GSTR-1 → Table 8 – Exempt outward supply

📝 Bonus Tip:

Had you charged GST on sale, you could have retained full ITC of ₹90,000 and charged 18% on ₹3,50,000 (₹63,000) as output tax — so you might want to assess which is more tax-efficient in future disposals.

Disclaimer: This discussion cannot be treated as an legal opinion as it is only for the purpose of knowledge enrichment.