TaxTMI 
TaxTMI 
Goods lost in fire also includes ‘Work – In – Process (WIP’) material. How to arrive at the amount of input tax credit to be reversed in case of WIP lost in fire?
ITC reversal on goods lost in fire
13 Apr 2023 
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Input tax credit reversal for goods lost in fire: whether WIP requires ITC reversal based on inputs consumed.
Dispute centers on whether ITC must be reversed when WIP or finished/intermediary goods are lost by fire. One approach requires reversing ITC attributable to inputs consumed in WIP, estimated via BOQ or WIP accounting and applying a GST percentage to stock. Another view argues no reversal where originally claimed inputs were not destroyed and no statutory method exists for apportioning ITC in such losses. (AI Summary)
Dispute centers on whether ITC must be reversed when WIP or finished/intermediary goods are lost by fire. One approach requires reversing ITC attributable to inputs consumed in WIP, estimated via BOQ or WIP accounting and applying a GST percentage to stock. Another view argues no reversal where originally claimed inputs were not destroyed and no statutory method exists for apportioning ITC in such losses. (AI Summary)