PLANT & MACHINERY- INPUT TAX CREDIT. Section 17[5][d] Vs Section 18[6]

[Sadanand Bulbule]

Dear experts

The provision of Section 18[6] of the CGST Act reads asunder:

6) In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher:

Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of such goods determined under section 15.

Query:

Coming back to the retrospectively amended Section 17[5][d] governing the entitlement of ITC on Plant & Machinery, what is the significance and implication of Section 18[6] on such ITC availed under Section 17[5][d]? What the beneficiary of such ITC needs to do? Plz clarify.

AI Summary

Input tax credit on plant and machinery - disposal requires payment under Section 18(6), higher of reduced ITC or tax on sale.
Where ITC has been availed on plant and machinery pursuant to the retrospective amendment to Section 17(5)(d) or otherwise, disposal of those capital goods triggers application of Section 18(6), obliging the supplier at the time of supply to pay the higher of the ITC availed after prescribed reduction for period of use or the tax payable on the transaction value; taxpayers must compute both amounts, maintain supporting documentation, reconcile book and GST records, and discharge the higher amount in the return for the period of supply.