QUESTION
Can ITC be availed on GST which is capitalised in the books of accounts along with asset?
ANSWER
Facts of the case:
Can ITC be availed on GST which is capitalised in the
books of accounts along with asset?
Law Applicable: SECTION 2 OF CGST ACT
(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;
SECTION 16 OF CGST ACT
(3) 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.
SECTION 17 OF CGST ACT
(5) Notwithstanding anything contained in sub-section (1) of section 16 and
subsection (1) of section 18, input tax credit shall not be available in respect
of the following, namely:-
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(c) works contract services when supplied for construction of an immovable
property (other than plant and machinery) except where it is an input service
for further supply of works contract service;
(d) goods or services or both received by a taxable person for construction of
an immovable property (other than plant or machinery) on his own account
including when such goods or services or both are used in the course or
furtherance of business.
Explanation.''For the purposes of clauses (c) and (d), the expression
'construction' includes re-construction, renovation, additions or alterations or
repairs, to the extent of capitalisation, to the said immovable property;
Interpretation: The Definition of capital goods is given in section 2 and
restriction on ITC is given in section 17 of CGST Act.
Section 17 put restriction on ITC on alterations or repairs, to the extent of
capitalisation of expense.
Further as per section 16 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, if you claim depreciation on the GST paid while purchasing the capital
asset, you cannot claim input tax credit.
Other than this there is no restriction like this.
(Reply dt. 11/06/2021)