Writing off of stock post GST

[Guest]

Sir,

What are the provisions in respect to write off the stock as on the date of implementation of GST and the stock acquired after the implementation of GST?

[Ganeshan Kalyani]

The corresponding input tax credit is required to be reversed.

[MUKUND THAKKAR]

Rule 3(5B) in the Cenvat Credit Rules, 2004, to provide that writing off the value of inputs and capital goods before putting them to use would entail reversal of the full Credit taken on them and that subsequent use of the inputs or capital goods would enable taking the Credit again. The latest Circular (number 907/27/2009-CX dated December 7, 2009) reiterates this position.

AI Summary

Input tax credit reversal required on write-off of stock; full credit reversed and reclaimable if items are later used. Input tax credit must be reversed when stock is written off; writing off inputs or capital goods before use triggers reversal of the full credit taken, though the credit may be reclaimed if those inputs or capital goods are subsequently used.