TaxTMI 
TaxTMI 
In case of capital goods destroyed in fire on which ITC is claimed, the ITC to be reversed on it whether will be on
1) entire ITC originally claimed or
2) as per the formula prescribed under Rule 44(6) of CGST Rules 2017?
capital goods destroyed in fire
06 Mar 2023 
16 Replies 
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Input tax credit reversal for destroyed capital goods may require pro rata adjustment under GST rules, not necessarily full disallowance.
No specific GST provision deals with used capital goods destroyed by fire; practitioners advise using the pro rata reversal formulas applicable to capital goods as a pragmatic guide, while noting authorities could invoke the exclusion for goods lost, stolen or destroyed to demand full reversal. Treatment may differ if destroyed goods are sold as scrap versus written off without sale, and past excise rulings supporting proportional reversal are cited, but positions remain litigation prone. (AI Summary)
No specific GST provision deals with used capital goods destroyed by fire; practitioners advise using the pro rata reversal formulas applicable to capital goods as a pragmatic guide, while noting authorities could invoke the exclusion for goods lost, stolen or destroyed to demand full reversal. Treatment may differ if destroyed goods are sold as scrap versus written off without sale, and past excise rulings supporting proportional reversal are cited, but positions remain litigation prone. (AI Summary)