TaxTMI 
TaxTMI 
I purchased capital goods (say, in a hotel) when the room tariff was taxed at 18% with ITC available. Later, the GST rate on hotel rooms was reduced to 5%, but with the condition that no ITC shall be available. In this situation, am I required to reverse the ITC that I had already availed when the tax rate was 18% because capital goods used less than 5 years only?
ITC Reversal on Tax rate reduced to 5% with No ITC
08 Sep 2025 
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Input tax credit retention: validly availed ITC need not be reversed when tax rate is reduced and supplies stay taxable.
A taxpayer who validly availed input tax credit on capital goods when supplies were taxable with ITC need not reverse that credit solely because the tax rate is subsequently reduced and prospectively made subject to a no ITC condition; reversal is required only where supplies become exempt or capital goods are diverted to exclusively exempt or non taxable use under the statutory reversal mechanisms. (AI Summary)
A taxpayer who validly availed input tax credit on capital goods when supplies were taxable with ITC need not reverse that credit solely because the tax rate is subsequently reduced and prospectively made subject to a no ITC condition; reversal is required only where supplies become exempt or capital goods are diverted to exclusively exempt or non taxable use under the statutory reversal mechanisms. (AI Summary)