ITC on Capital work in progress

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... Dear Sir, One of our clients is under process of fabricating a machinery and since it is a longer term project, it is held in CWIP as on 31.03.2020. The machinery involved use of imported materials on which IGST was paid at port, however, the client has taken the view that GST ITC on same is not available until capitalisation of asset and therefore GST paid is capitalised as Deferred GST Input .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... and shown as a separate asset and neither is GST claimed in GSTR-3B . Section 2(19) of CGST Act 2017 defines capital goods as: (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; However, when asset is capitalised .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... as CWIP in Balance sheet would it not amount to capitalisation and make assessee eligible for Input claim? Or he has to wait till completion of project to claim GST input? Please provide your expert opinions in light of both section 2 as well as section 16 of CGST Act 2017 ? - Reply By KASTURI SETHI - The Reply = My views are as under :- 1. No need to wait for completion of the proje .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ct. Note the words, intended to be used mentioned in the definition of 'Capital Goods'. Section 16 of CGST Act also talks of the phrase, intended to be used. 2. See Rule 43 (5) of CGST Rules, 2017 Q No.3 When asset is capitalised as CWIP in Balance sheet would it not amount to capitalization and make assessee eligible for Input Tax Credit claim on Capital Goods ? 3. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... Answer : Yes. Books of account are statutory records. You are well aware that Balance Sheet is based on books of account. - ITC on Capital work in progress - Query Started By: - ROHIT GOEL Dated:- 27-8-2020 Goods and Services Tax - GST - Got 1 Reply - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... - taxmanagementindia.com - TMI - TaxTMI - TMITax .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X