Finished goods stock unsold for long time clear as scrap

[Yatin Bhopi]

Sir,

We have old stock of finished goods which is unsold for long time. Due to its nature it is not usable. Now we are clearing this stock far lower then its market price. say similar product we are selling in market at ₹ 150\kg, we are clearing this stock at ₹ 15/kg.

Are we need to reverse the ITC availed?. let me know GST provision in this regard

[YAGAY andSUN]

In our view, ITC needs to be reversed since it is being sold at lower price due to not having demand. There is no specific provision however, Section 17 (5) may be referred to some extent.

[DR.MARIAPPAN GOVINDARAJAN]

I concur with the views o YAGAY

[Vinay Kumar]

Dear Sir,

Can U give more explanation for this question, How can we reverse the ITC availed ??

[Ganeshan Kalyani]

Since the material is not sold you can trace the purchase value and GST involved in that purchase invoice. The same GST amount need to be reversed via GSTR-3B.

[KASTURI SETHI]

I support the views of all the experts. However, for safer side, for correct amount of reversal, an CMA is the best option.

[Ramesh Kothari]

Kasturiji

If CMA is less than purchase price in that case is not possible to matter may be come under litigated with GST once it audited

Pl comment

[KASTURI SETHI]

Sir,

You have mentioned that "CMA is less than purchase price________". Pl. make it clear. What I wanted to say "CMA-Cost Management Accountant.

AI Summary

Input tax credit reversal required when obsolete finished goods are sold as scrap, reverse GST via the periodic return. Selling finished goods as scrap at a deep discount necessitates reversal of input tax credit; practitioners advise tracing original purchase invoices and reversing the GST amount via GSTR-3B, with valuation support from a Cost Management Accountant to establish the correct reversal amount and to mitigate audit or dispute risk.