Switching from composition scheme to normal scheme of payment of tax - Whether the assessee is eligible to avail Input Tax Credit (ITC) on inputs or capital goods held in stock? How to determine the amount of ITC on capital goods to be availed?

Entities Switching from GST Composition to Normal Scheme Can Claim Input Tax Credit per Section 18(1)(c) CGST Act 2017.

An entity switching from the GST composition scheme to the normal scheme is eligible to avail Input Tax Credit (ITC) on inputs and capital goods held in stock. According to Section 18(1)(c) of the Central Goods and Services Tax Act, 2017, credit can be claimed on inputs, semi-finished, or finished goods held before the transition date. For capital goods, Rule 40(1)(a) specifies that ITC should be reduced by 5% per quarter from the invoice date. However, Section 18(2) restricts claiming ITC on supplies received after one year from the invoice date.