ITC on Capital Goods in case of Conversion from FCM to RCM incase of GTA

[Ojas Shah]

Dear Sir/Madam,

What if GTA wants to move from RCM to FCM in the year FY 2019-20 and then again FCM to RCM in FY 2020-21. Will the ITC on Capital Goods and Inputs received in the FY 2019-20 (FCM phase) be reversed. If yes? Till what extent it can get reverse.

Also is there any restriction from moving to FCM to RCM and again to FCM.

Kindly Guide on the same.

AI Summary

Input tax credit reversal required when a goods transport agency shifts from forward charge to reverse charge at year start.
GTA may opt between forward charge and reverse charge only at the start of a financial year. Under FCM the GTA pays tax and may avail ITC; under RCM the GTA's supplies are treated as exempt and ITC is not allowed. If a GTA moves from FCM to RCM at the financial year start, the unutilized proportionate ITC on inputs and capital goods must be reversed in terms of the prescribed reversal mechanism (Rule 44).