DEPRECIATION ON CAPITAL GOODS WITH GST COMPONENT

[Sadanand Bulbule]

Dear experts

Section 16[3] of the CGST Act reads as under:

(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax component shall not be allowed.

It means, to claim ITC, registered person has to claim depreciation on the value of the capital goods purchased without including the GST paid.

In view of this , what would be implications on Section 17[5][d] in terms of recent judgement of Hon'ble Supreme Court in Safari Retreat case?

My understanding is, taxpayers falling under 16[3] cannot claim the benefit of ' ITC ' under Section 17[5][d].

There are some such instances claiming both depreciation and ITC without anticipating backfire from the department.

Your validations plz.

AI Summary

Claiming Depreciation and ITC on Capital Goods under GST: Section 16(3) and Safari Retreat Case Insights A discussion on a forum addresses the issue of claiming depreciation and Input Tax Credit (ITC) on capital goods under the Goods and Services Tax (GST) framework. According to Section 16(3) of the CGST Act, if a registered person claims depreciation on the GST component of capital goods, they cannot claim ITC on the same component. The discussion references a Supreme Court judgment in the Safari Retreat case, which affects the interpretation of Section 17(5)(d). Participants agree that claiming both depreciation and ITC simultaneously is not permissible and could lead to penalties. The conversation also touches on the definition of capital goods and movable property, emphasizing the need for careful compliance with tax regulations.