Request your guidance on following matter of sale of plant & Machinery in GST regime:
Purchased on 28th Sep 2017 Rs.751,000 + GST @ 18% 135,180 = 886,180 and sale of the same on 13th Aug 2018 Rs.565,000 + GST @ 18% 101700 = 666,700.
We have already paid the GST on the machinery sale. Please advise in case if there is any other ITC reversal applicable in this case.
Section 18(6) of CGST Act, contains provisions of sale of capital goods on which ITC has been taken. The registered person shall pay an amount equal to—
1) ITC taken on such capital goods reduced by such percentage points as may be prescribed (Rule 44(6) of CGST Act); or
2) Tax on transaction of such capital goods determined u/s 15, whichever is higher
As per rule 44 (6) amounts of input tax credit involved in capital goods held in stock, the Input tax credit involved in the remaining useful life in months shall be computed on prorata basis, taking the useful life as five years. Further if the amount so determined is more than the tax determined on the transaction value of the capital goods, the amount determined shall from part of the output tax liability and the same shall be furnished in FORM GSTR-1.
The following procedure should apply as per facts given in the query.
Cost of capital good— 7,51,000 + GST@18% 135,180
Used for 11 month
ITC of balance life of capital goods — 1,10,397/- (1,35,180 x 49/60)
Sale consideration for old asset is — Rs. 565,000 + GST @18% 101700
As 1,10,397 is greater than 1,01,700, therefore Rs. 1,10,397/- is payable and has to be reported in GSTR 1. Tax Invoice has to be prepared in this case with Invoice Value as Rs.6,75,397/-. And taxable value to be reported in invoice and GSTR 1 will be Rs. 6,13,316.