Dear team one of my client has taken the benefit of input tax of solar plant and plant and machinery and he has charged the depreciation on the principle value excludes the gst part wether he is liable to take this input benefit or not. pls advise and any notification give the reference of that

Reply—As per Section 16(3) of CGST Act, 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, the input tax credit on the said tax component shall not be allowed.

Thus, taxpayer has two options either he can claim it as ITC or add into cost and claim depreciation.

Section 16 of CGST Act, clearly states that input tax credit can be taken of any good or service purchased for ‘Furtherance of Business'. Section 17(5) is also not restricted input tax credit on purchase of Solar panel. Thus, a taxpayer is eligible to take input tax credit on purchase of Solar panel. Solar system can be considered as plant and machinery and input tax credit may be availed.