TaxTMI 
TaxTMI 
In the case of sale of fixed assets (capital goods) on which Compensation Cess has been availed, whether the Compensation Cess payable is required to be determined in accordance with the provisions of Section 18(6) of the CGST Act read with Rule 44(6) of the CGST Rules (i.e., proportionate reversal based on the remaining useful life of five years), or whether Compensation Cess is payable only on the transaction value of the outward supply?
Requirement of CESS reversal on sale of capital goods
16 Dec 2025 
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Sale of capital goods: compensation cess payable is the higher of transaction-value cess or proportionate reversal based on remaining useful life.
Where Compensation Cess ITC was availed on capital goods, cess payable on their sale is the higher of cess on the transaction value or the proportionate cess attributable to remaining useful life calculated under Section 18(6) read with Rule 44(6); if no cess credit was availed at purchase, the proportionate reversal mechanism does not apply and cess liability is limited to the transaction value. (AI Summary)
Where Compensation Cess ITC was availed on capital goods, cess payable on their sale is the higher of cess on the transaction value or the proportionate cess attributable to remaining useful life calculated under Section 18(6) read with Rule 44(6); if no cess credit was availed at purchase, the proportionate reversal mechanism does not apply and cess liability is limited to the transaction value. (AI Summary)