Query Regarding Reversal of ITC on Capital Goods if business is closed within 5 years of Purchase of Capital Goods.

[MANISH MATA]

Hello Dear Sir / Madam,

My query is I had recently purchased a machinery for business purpose and availed ITC worth ₹ 28000. But now after 11 months of purchase, I closed my business. So will there be any impact on ITC already availed ? Will i have to make any reversal of ITC already taken ?

Thanks in Advance.

AI Summary

Reversal of Input Tax Credit on capital goods if business closes within 11 months of purchase; see Rule 44. A participant inquired about the reversal of Input Tax Credit (ITC) on capital goods after closing a business within 11 months of purchasing machinery. Three responses were provided. One advised that if the machinery is sold, taxes must be paid, and any remaining credit will lapse upon registration cancellation. Another response emphasized reversing proportionate ITC if the registration is canceled or machinery is sold within five years, referencing Rule 44 for details. The third respondent agreed with the first reply, supporting the explanation provided.