Requirement of CESS reversal on sale of capital goods

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....equirement of CESS reversal on sale of capital goods<br> Query (Issue) Started By: - vaibhav agrawal Dated:- 16-12-2025 Last Reply Date:- 20-12-2025 Goods and Services Tax - GST<br>Got 5 Replies<br>GST<br>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 provisio....

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....ns 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? Reply By Sadanand Bulbule: The Reply: In my opinion, the provisions of Section 18[6] of the CGST Act do not apply to Compensation Cess. Therefore rev....

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....ersal of Cess is not required. However if the supply of capital goods attracts Cess, then it is payable on the transaction value. Reply By Ryan Vaz: The Reply: Issue Summary Whether, on sale of capital goods on which GST Compensation Cess ITC was availed, the cess payable is to be computed on transaction value or by proportionate reversal under Section 18(6) read with Rule 44(6). Applicable La....

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....w / Provisions * Section 18(6), CGST Act, 2017 - Treatment of ITC on supply of capital goods * Rule 44(6), CGST Rules, 2017 - Manner of reversal (useful life of 5 years) * Section 11(2), GST (Compensation to States) Act, 2017 - Application of CGST Act provisions to Compensation Cess * CBIC FAQs on GST Compensation Cess (principle-based clarification) Short Practical Answer On sal....

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....e of capital goods on which Compensation Cess ITC has been availed, Compensation Cess payable shall be the higher of: * Cess on transaction value, or * Cess attributable to remaining useful life, calculated proportionately as per Section 18(6) read with Rule 44(6). The Section 18(6) mechanism applies equally to Compensation Cess. Reply By Sadanand Bulbule: The Reply: I welcome the reply....

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.....&nbsp; Reply By KASTURI SETHI: The Reply: Comprehensive and perfect reply by Sh. Ryan Vaz, Sir&nbsp; Reply By Shilpi Jain: The Reply: In case you have not availed credit of compensation cess at the time of purchase of the fixed asset then section 18(6) will not be applicable.<br> Discussion Forum - Knowledge Sharing ....