reversal on account of sale of asset

[X Y]

The taxpayer purchased Crane on which ITC (IGST) was availed on 25.08.2020 for 1.94 Lac. Now the same crane has being sold with in state on 22.06.2022 for Rs. 5.10 Lac where CGST-45900 and SGST-45900 is payable. The input (IGST) reversal 1.23 Lac (1.94*38/60) is due as per Rule 44(6). You are requested to advise how IGST reversal of input can be made when there is CGST and SGST payable on sale within state. Because higher of ITC reversal and tax payable is to be paid but here components of tax are different

AI Summary

Taxpayer Must Pay Higher of ITC Taken or Tax on Transaction Value for Crane Sale Under Section 18(6) A taxpayer sold a crane within the state, originally purchased with input tax credit (ITC) on IGST, and sought advice on reversing the ITC when CGST and SGST are now payable. The response highlighted that under Section 18(6) of the CGST Act, the taxpayer must pay the higher of the ITC taken or the tax on the transaction value. The discussion clarified that the amount payable is not an ITC reversal but a tax liability on the supply of capital goods, which should be reported in GSTR-1 as tax charged and paid. This allows the buyer to avail ITC, preventing any loss to the seller.