How to Show GST Implication of Sale of Fixed Asset in GST Return

[Roshan Chaudhary]

A Capital Asset is Purchased At 590000 in which 90000 is GST, and after 1 year 2 Month, the Capital Asset Sold at 350000 without Tax (GST rate is 18% on the Sale). We Have to Reverse the Input tax Credit based on 5% quarter. How will we show the transaction in GSTR-1 and GSTR-3B

[Sadanand Bulbule]

Read the break-up details of Box No. 3 & 4 of the GSTR-3B carefully.

[YAGAY andSUN]

In continuation of the above reply, following revert may also be useful for you in the aforesaid matter: 

As per our Understanding of this matter you're tackling an important GST ITC reversal requirement when capital goods are soldbefore the end of their useful life (5 years = 20 quarters). Let’s break it down step by step and explain both the ITC reversal calculation and how to report this in GSTR-1 and GSTR-3B.

🔍 Scenario Summary:

Item	Value
Purchase Value	₹5,90,000
GST Paid (ITC availed)	₹90,000 (18%)
Time Held Before Sale	1 year 2 months = ~5 quarters
Capital Goods Sold At	₹3,50,000 (no GST charged)
GST Rate on Sale	18%
Sale is Without GST	Hence ITC Reversal Required

🧮 Step-by-Step ITC Reversal Calculation (as per Rule 44(6) of CGST Rules)

If capital goods are sold without tax, ITC reversal is required using the 5% per quarter rule.

1. Total Quarters of Usage:

• 1 year 2 months = 5 quarters

2. Number of Remaining Quarters (out of 20):

• Total useful life: 5 years = 20 quarters
• Used: 5 quarters
• Remaining: 15 quarters

3. ITC to be Reversed:

• Reversal = (5% of ITC per quarter) × remaining quarters
• Reversal = 5% × 15 = 75% of ₹90,000
• = ₹67,500

👉 ₹67,500 needs to be reversed as ITC since the sale is made without charging GST.

📤 How to Show in GSTR-3B

In GSTR-3B, ITC reversal is reported in Table 4(B)(2):

🔸 Table 4(B)(2): "Others" – ITC Reversed

Particulars: Others

Amount: ₹67,500

This will reduce your total available ITC for the month.

📄 How to Show in GSTR-1

Since the capital asset is sold without tax, this is considered a non-GST/outward exempted supply. You need to report it in Table 8 of GSTR-1:

🔸 GSTR-1 → Table 8: Nil Rated, Exempted and Non-GST outward supplies

Nature	Taxable Value	Integrated Tax	Central Tax	State/UT Tax
Exempted Outward Supply	₹3,50,000	0	0	0

👉 You're not charging GST, so report the value as exempted outward supply here.

✅ Summary:

Action	Reporting
Reverse ITC (₹67,500)	GSTR-3B → Table 4(B)(2) – “Others”
Sale of asset (₹3,50,000)	GSTR-1 → Table 8 – Exempt outward supply

📝 Bonus Tip:

Had you charged GST on sale, you could have retained full ITC of ₹90,000 and charged 18% on ₹3,50,000 (₹63,000) as output tax — so you might want to assess which is more tax-efficient in future disposals.

Disclaimer: This discussion cannot be treated as an legal opinion as it is only for the purpose of knowledge enrichment.

AI Summary

ITC reversal requirement for disposal of capital goods held short of useful life; report reversal in GSTR 3B and sale in GSTR 1. An ITC reversal is required when a capital good purchased with ITC is sold before its five year useful life. Compute reversal by counting quarters of use and applying the prescribed per quarter percentage to the original ITC; remaining quarters determine the reversal proportion. Report the reversal in GSTR 3B Table 4(B)(2) as 'Others' and disclose the sale without tax in GSTR 1 Table 8 as an exempt outward supply.