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of <h1>Switching to CGST Composition Scheme: Reverse ITC on Stock and Capital Goods per Section 18(4) and Rule 44(2).</h1> When switching from the normal payment of tax to the composition scheme under the CGST Act, 2017, an assessee must reverse the Input Tax Credit (ITC) on inputs and capital goods held in stock. According to Section 18(4), the assessee must debit an amount equivalent to the input tax credit for inputs in stock and semi-finished or finished goods, adjusted by a prescribed percentage, as of the day before opting for the composition scheme. Rule 44(2) specifies that for capital goods, the ITC for the remaining useful life is calculated on a pro-rata basis, assuming a five-year useful life.
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