GST Impact on Sale of used Capital goods purchased under the GST regime

Please refer the link below

https://gstexpertise.com/2017/09/25/gst-impact-on-sale-of-used-capital-goods-purchased-under-the-gst-regime/

Query no -1 Impact of GST on sale of Second hand Capital Goods within/ post the period of 60 Months from the date of purchase under the GST regime 

Reply to above

When sold within the period of 60 months from the date of Sale 

In case the used capital goods being sold within the period of 60 months then GST shall be paid on higher of the below’;

• Input tax for the pending useful life
• Tax on the Transaction Value of the sale of Capital goods

Let’s suppose we have purchased Trucks on which 60,000 credit was availed and after 55 months, we have sold the said capital goods for Rs 1,00,000. In such situation, taking the rate of tax on sale of Capital goods i.e. 28% , the value which needs to be taken for the purpose of sale of capital asset, shall be higher of the below

• INR 5000 ( 60,000 ( Total Credit taken on Capital Goods) * 5 ( unutilised period of useful life) /60 ( Total Useful life period)
• 28,000  ( 1,00,000 *28%)

So we have to pay the tax amounting to INR 28,000.

However, in case in the above example the unutilised credit is INR 30,000 instead of 5000. Then the applicable reversal// payment of tax on sales of capital goods shall be INR 30,000 instead of INR 28,000.

When Capital Goods sold post the period of 60 months from the date of Purchase under the GST regime 

Please note that after the 60 months period, the company needs to discharge GST ( applicable rate) on transaction value. 

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