GST Exemption on cold storage machinery

[Guest]

Dear Representative,

Very Good Afternoon,

we are planning to built a cold storage facility for fresh fruits and vegetables. we will use cold storage facility for fruits and vegetables on rental basis and for own produce storage. As providing cold storage facility for fresh fruits and vegetables on rental basis does not attracts any GST under Notification No. 11/2017-Central Tax (Rate) Heading 9986 we can not charge GST on our service.

As we are not charging any GST on our service, GST paid by us on our machinery will always remain credited in department. so, which form we will be required for GST exemption while purchasing machinery?

[Rajagopalan Ranganathan]

Sir,

Since the service provided by you is exempted you cannot avail gst paid on capital goods used for providing the exempted service. It will be added to your cost of providing the service.

[Ganeshan Kalyani]

If GST credit is not available, then it can be capitalised in the fixed asset register and depreciation benefit can be claimed.

Either GST credit or depreciation benefit can be claimed in GST.

[KASTURI SETHI]

I support the replies of both experts.

[SIVARAMA KUMAR]

Since your business is exempted and you also use it for your own products (assuming non business purposes) you are not eligible to avail ITC, and necessarily to be reversed (if posted in the EC ledger).

The act clearly mentions that only the eligible ITC shall be credited to the EC ledger. and hence it would be a better proportion to include the gst paid to the cost of your asset and claim the benefit of depreciation.

AI Summary

Input tax credit denial for exempt cold storage services: GST on machinery must be capitalised and recovered via depreciation. Hiring cold storage for fruits and vegetables is an exempt supply, therefore GST on machinery used for that exempt activity is not available as input tax credit and must be capitalised as part of the asset cost. Taxpayers should record the GST-paid amount in the fixed asset register and claim the tax benefit through depreciation; any GST wrongly credited must be reversed to the electronic credit ledger.