Input tax credit apportionment for capital goods: apportioned over statutory life with adjustments for exempt and non business use.
Rule 43 prescribes apportionment of input tax credit for capital goods by reference to use: credit is available to the extent of taxable or zero rated use and disallowed for exempt or non business use, with assets treated as having a five year useful life and allocation expressed as periodic reductions (5% per quarter or 1/60th per month). The rule creates a common credit pool for commonly used capital goods, requires proportionate addition to output tax liability for exempt use (with interest under the rule), and contains drafting inconsistencies and silences-notably on non business use and whether reductions should be quarterly or monthly-which must be resolved by reference to section 17 and related rules. (AI Summary)