Under Model GST Law, specific provisions have been given to avail input credit on Capital Goods. In this video we are going to talk about the provisions of section 168 of Model GST Law. The provisions can be divided into two categories
Input Credit Admissible for Capital Goods under CGST Law
Input Credit Admissible for Capital Goods under SGST Law
Input Credit Admissible for Capital Goods under CGST Law
A registered taxable person, other than a person opting to pay tax under Composition Scheme shall be entitled to take, in his electronic credit ledger, credit of the unavailed cenvat credit in respect of capital goods, not carried forward in a return, furnished under the earlier law by him, for the period ending with the day immediately preceding the appointed day in such manner as may be prescribed
Point to be Noted:
Input Tax credit will be only admissible on capital goods defined in Cenvat Credit Rules not as per GST Law.
Unavailed cenvat credit means the amount that remains after subtracting the amount of cenvat credit already availed in respect of capital goods by the taxable person under the earlier law from the aggregate amount of cenvat credit to which the said person was
entitled in respect of the said capital goods under the earlier law.
Input Credit Admissible for Capital Goods under SGST Law
A registered taxable person, other than a person opting to pay tax under Composition Scheme, shall be entitled to take, in his electronic credit ledger, credit of the unavailed input tax credit in respect of capital goods, not carried forward in a return, furnished under the earlier law by him, for the period ending with the day immediately preceding the appointed day in such manner as may be prescribed
Point to be Noted:
Input Tax Credit will be only admissible on capital goods defined under respective State VAT Laws.
For example: Under KVAT, there is restriction on taking input credit on office equipment. However as per GST Law, Capital goods are those which have been accounted as capital goods. Therefore in such a scenario, input tax credit can be only taken if under state law it was classified as capital goods and input credit was admissible.