ITC Reversal on Tax rate reduced to 5% with No ITC

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....TC Reversal on Tax rate reduced to 5% with No ITC<br> Query (Issue) Started By: - BIJO SCARIA Dated:- 8-9-2025 Last Reply Date:- 10-9-2025 Goods and Services Tax - GST<br>Got 2 Replies<br>GST<br>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 avail....

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....able. 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? Reply By Sadanand Bulbule: The Reply: There is no requirement to reverse the ITC already availed on capital goods purchased when the output supply (hotel room tariff) was taxable at 18% with ITC benefit. The restriction of "no ITC" appl....

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....ies prospectively from the date the reduced rate (5%) is opted/comes into effect. As per GST provisions, ITC law does not mandate reversal of credit already validly availed merely because of a subsequent change in rate structure. Reversal is required only in cases of exempt supplies or where the capital goods are shifted to exclusively exempted/non-taxable use (Section 18(4) of the CGST Act, Rule....

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.... 43). In your case, the supply remains taxable (at 5%), hence no reversal of earlier availed ITC is warranted, even if the capital goods are within 5 years of use. Thus, you may continue to retain the ITC already availed before the rate change Reply By Rajeev Khulbe: The Reply: APKI SUPPLY 5% WITHOUT ITC MAIN COVERED HO GAYI HAIN.NOW AGER APKE HOTEL MAIN KOI BHI ROOM 7500 SE EXCESS NAHIN HAIN, ....

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....THEN APKO ITC REVERSE KERNE KI KOI NEED NAHIN HAIN BUT AGER APKE HOTEL MAIN ROOM CHARGES 7500 SE LESS AND&nbsp; EXCESS HAIN THEN APKO AS PER RULE 42 APKO ITC REVERSE KERNA HOGA THROUGH 3B.<br> Discussion Forum - Knowledge Sharing ....