GST on damaged machinery

[KARAN VERMA]

Sir, there is fire in factory and some machineries are damaged.

5 machines purchased before GST and 3 machines purchased after GST.

What will be tax implication if I received compensation from insurance co.

Whether I need to reverse input credit on machinery purchased in Excise and GST regime.

AI Summary

Fire Damages Factory: GST Not Applied on Insurance Claims; Input Tax Credit Reversal Rules Explained Under Section 17(5)(h) A fire damaged several machines in a factory, prompting a query about the GST implications on insurance compensation and input credit reversal. Machines were purchased both before and after the GST implementation. Responses clarified that GST is not applicable on insurance claims. For machines bought under the Excise regime, no credit reversal is needed if no credit was transitioned. For those purchased under the GST regime, credit reversal is required unless the machinery has scrap value. Input Tax Credit (ITC) must be reversed for goods lost or destroyed, as per section 17(5)(h), and duty is paid when clearing scrap.