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 required on capital goods if registration cancelled or goods sold within five-year life.
Closure or sale of business assets triggers ITC reversal where registration is cancelled or the asset is disposed of within its prescribed useful life. On sale, tax is payable on the transaction value and available input tax credit may be used against that liability; residual credit lapses on cancellation. If the asset is sold or registration cancelled before the end of the asset's useful life, a proportionate reversal of input tax credit is required, treating the useful life of the capital good as five years for the reversal computation.