Question ID : 40803

SALE OF OLD TRUCK (ISSUE OF CHARGING OF GST)

X A business man engaged in trading purchased a Truck of Rs 20 L + GST 28% 5.60 = 25.60 in FY 2019-20. The GSt of Rs 5.60 was taken as input in the FY 2019-20. In CY 2020-21 now he wants to sale the truck for Rs 17 Lacs after deducting dep. My query is whether he will have to charge GST on sale price of truck of Rs 17.00 L + GST 28%. Or Input taken in FY 2019-20 ought to be reversed considering 1 year of usage of machinery in the business. Which option he will have to consider here.

As per CGST rule 44(6), useful life of the assets will be taken as 5 years for ITC Reversal and as above total ITC is 5.60 lacs means 1.12 lacs per year and assessee used machinery for 1 year it means total ITC Remaining is Rs. 4.48 lacs but As per sec 18(6) of CGST Act Taxable amount will be an amount equal to Input tax credit attributed to remaining useful life or tax on transaction value of such goods whichever is higher and in above case ITC Remaining is Rs. 4.48 lacs and ITC on transaction value is 4.76 lacs. it means taxable value should be 17 lacs and tax should be paid on this @ 28%.