ITC On used machinery

[husen kadwalwala]

I have query regarding availing ITC.

The supplier has used the plant for two years and had a total ITC of 15 lacs . he has sold all his material nil rated and reversed the ITC on propionate basis.

We are in process of buying a used plant and machinery. There is 7 lacs ITC to be claimed. When we generate a sells invoice can the supplier offset cgst/sgst of bill amount against his pending ITC.

[Shilpi Jain]

If the supplier had initially claimed the entire ITC and has reversed periodically, then he can claim the ITC pertaining to the remaining 3 years and set that off against the output tax liability payable on sale of the machinery.

[anakha sj]

Yes, the supplier can offset the CGST/SGST liability of the sales invoice amount against their pending ITC of ₹7 lakhs, provided it complies with GST provisions. Ensure proper documentation and GST compliance, including invoices and ITC reversal details, for the transaction. Verify that the machinery is eligible for ITC and confirm the supplier has reversed ITC proportionately as per GST rules.

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir, 

There is no bar to use ITC at credit subject to other conditions if any.  Pl. ensure that the ITC reversal was properly done.

AI Summary

Input tax credit on used machinery can be applied to offset CGST/SGST if proportional reversal and documentation are complied. A supplier who availed Input Tax Credit on plant and machinery may set off remaining ITC against CGST/SGST liability on sale of used machinery if the supplier has performed the required proportional ITC reversal and the machinery is eligible for ITC; proper invoices and documentation evidencing the reversal and compliance must be maintained.