can we use input tax credit on capital goods , to the rental income services

[lagudu sivakumar]

Dear Experts,

one of our client is a company and it have utilised 'input tax credit on Capital goods' towards the service of 'rental income of the premises' during the financial year 2020-21.

what is the remedy for the above problem.

please need your help regarding above query

Thanking you

[KASTURI SETHI]

What are capital goods ?

[lagudu sivakumar]

Sir,

our client is a manufacturing of apparels business, here capital goods are "plant and machinery" required for stitching machinery.

Thanking You sir

[Shilpi Jain]

The moment credit is eligible it can be utilised for paying gst on outward gst liability.

There is no restriction in using ITC of capital goods for paying outward gst

[KASTURI SETHI]

There is no condition of one-to-one correlation in GST. It is also not blocked under Section 17 (5) of CGST Act.

[lagudu sivakumar]

Thank you very much sir for your valuable suggestion

AI Summary

Input tax credit on capital goods can be applied to pay outward GST liability for rental services under eligibility principles. The issue concerns use of Input Tax Credit on capital goods (plant and machinery) by an apparel manufacturer to pay GST on rental services. Replies state that eligible credit may be applied against outward GST liability, there is no requirement of one-to-one correlation between input and output, and credit for capital goods is not barred under the credit-denial provisions relied upon, so such utilisation is not precluded on those grounds.