(1) Subject to the provisions of subsection (3) of section 16, the input tax credit in respect of capital goods, which attract the provisions of subsections (1) and (2) of section 17, being partly used for the purposes of business and partly for other purposes, or partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies, shall be attributed to the purposes of business or for effecting taxable supplies in the following manner, namely,-
(a) the amount of input tax in respect of capital goods used or intended to be used exclusively for non—business purposes or used or intended to be used exclusively for effecting exempt supplies shall be indicated in FORM GSTR—2 and shall not be credited to his electronic credit ledger;
(b) the amount of input tax in respect of capital goods used or intended to be used exclusively for effecting supplies other than exempted supplies but including zero— rated supplies shall be indicated in FORM GSTR—Z and shall be credited to the electronic credit ledger;
(c) the amount of input tax in respect of capital goods not covered under clauses (a) and (b), denoted as ‘A’, shall be credited to the electronic credit ledger and the useful 12 life of such goods shall be taken as five years from the datc of the invoice for such goods:
Provided that where any capital goods earlier covered under clause (a) is subsequently covered under this clause, the value of ‘A’ shall be arrived at by reducing the input tax at the rate of five percentage points for every quarter or part thereof and the amount ‘A’ shall be credited to the electronic credit ledger;
Explanation~ An item of capital goods declared under clause (a) on its receipt shall not attract the provisions ofsub-section (4) ofsection l8, ifil is subsequently covered under this clause.
(d) the aggregate of the amounts of ‘A’ credited to the electronic credit ledger under clause (c), to be denoted as ‘Tc’, shall be the common credit in respect of capital goods for a tax period:
Provided that where any capital goods earlier covered under clause (b) is subsequently covered under clause (c), the value of ‘A’ arrived at by reducing the input tax at the rate of five percentage points for every quarter or part thereof shall be added to the aggregate value ‘Tc’;
(e) the amount of input tax credit attributable to a tax period on common capital goods during their useful life, be denoted as ‘T,..’ and calculated as- Tm= Tc+60
(t) the amount of input tax credit, at the beginning of a tax period, on all common capital goods whose useful life remains during the tax period, be denoted as ‘T,’ and Shall be the aggregate of‘Tm’ for all such capital goods;
(g) the amount of common credit attributable towards exempted supplies, be denoted as ‘Te’, and calculated as- T..= (12+ F) x Tr where, ‘E’ is the aggregate value of exempt supplies, made, during the tax period, and ‘F’ is the total turnover of the registered person during the tax period:
Provided that where the registered person docs not have any turnover during the said tax period or the aforesaid information is not available, the value of ‘E/F’ shall be calculated by taking values of ‘E’ and ‘F’ 0fthe last tax period for which the details of such turnover are available, previous to the month during which the said value of ‘E/F’ is to be calculated;
Explanation: For the purposes of this clause, it is hereby clarified that the aggregate value of exempt supplies and the total turnover shall exclude the amount of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution and entry 51 and 54 of List [I 0fthe said Schedule;
(h) the amount Tc along with the applicable interest shall, during every tax period of the useful life 0fthe concerned capital goods, be added to the output tax liability of the person making such claim of credit,
(2) The amount Te shall be computed separately for central tax, State tax, Union territory tax and integrated tax.
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44. Manner of reversal of credit under special circumstances.~ (I) The amount of input tax credit relating to inputs held in stock, inputs contained in semi»finished and finished goods held in stock, and capital goods held in stock shall, for the purposes of subsection (4) of section 18 or sub-section (5) of section 29, be determined in the following manner, namely,-
(a) for inputs held in stock and inputs contained in semi-finished and finished goods held in stock, the input tax credit shall be calculated proportionately on the basis of the corresponding invoices on which credit had been availed by the registered taxable person on such inputs;
(b) for capital goods held in stock, the input tax credit involved in the remaining useful life in months shall be computed on pro~rata basis, taking the useful life as five years.
Illustration:
Capital goods have been in use for 4 years, 6 month and 15 days, The useful remaining life in months= 5 months ignoring a part ofthe month Input tax credit taken on such capital goods: C Input tax credit attributable to remaining useful life= C multiplied by 5/60
(2) The amount, as specified in sub-rule (1) shall be determined separately for input tax credit of integrated tax and central tax.
(3) Where the tax invoices related to the inputs held in stock are not available, the registered person shall estimate the amount under sub—rule (1) based on the prevailing market price of the goods on the effective date of the occurrence of any of the events specified in sub~ section (4) ofsection [8 or, as the case may be, sub-section (5) ofsection 29.
(4) The amount determined under sub-rule (1) shall form part of the output tax liability of the registered person and the details ofthe amount shall be furnished in FORM GST ITC- 03, where such amount relates to any event specified in sub-section (4) of section 18 and in FORM GSTR-lO, where such amount relates to the cancellation ofregistration.
(5) The details furnished in accordance with sub-rule (3) shall be duly certified by a practicing chartered accountant or cost accountant.
(6) The amount of input tax credit for the purposes of sub-section (6) of section 18 relating to capital goods shall be determined in the same manner as specified in clause (b) of subrule (I) and the amount shall be determined separately for input tax credit of IGST and CGST:
Provided that where the amount so determined is more than the tax determined on the transaction value of the capital goods, the amount determined shall form part of the output tax liability and the same shall be furnished in FORM GSTR-l.