TaxTMI 
TaxTMI 
Depreciation on the unclaimed ITC portion - NBFC
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....epreciation on the unclaimed ITC portion - NBFC <br> Query (Issue) Started By: - Bhavesh Suthar Dated:- 28-9-2026 Goods and Services Tax - GST <br> Got 4 Replies <br> GST<br> <br> We are an NBFC. Every month, we reverse 50% of the eligible ITC as per Rule 38. So for 50% ITC which is reversed, can it be added back to the fixed asset and can depreciation be claimed on that portion (on 50% of the GST....
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.... amount), taking into account Section 16(3) of the CGST Act, 2017? Or can it be said that since it has first been availed and the reversed, the right to claim depreciation is lost. --Reply By: KALLESHAMURTHY MURTHY K.N. The Reply: Sir, Under Section 17(4) of the CGST Act read with Rule 38, a Non-Banking Financial Company (NBFC) can opt to claim 50% of eligible ITC monthly, while the remaining ....
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....50% will lapse permanently. Since the reversed, or lapsed, portion of ITC cannot be reclaimed, it is a cost borne by the NBFC and forms part of the actual purchase cost of the capital goods. Under the IT Act, depreciation can be claimed subject to Sec. 16(3) of the CGST Act. --Reply By: Raam Srinivasan Swaminathan Kalpathi The Reply: Yes, you can claim depreciation under the Income Tax Act on t....
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....he reversed (or lapsed) portion of the ITC on capital goods.. --- Sub-Reply By: Bhavesh Suthar The Sub-Reply: Is it a clear and safe stand or is it litigative? --Reply By: Raam Srinivasan Swaminathan Kalpathi The Reply: The choice is either you write off the expunged ITC on capital goods or capitalise the same. Where is the room for litigation in this? IT department may litigate if you writ....
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....e-off the lapsed ITC and therefore it would better to capitalise and claim depreciation. <br>***<br> Discussion Forum - Knowledge Sharing....