Rule 44 of CGST Rules 2017: Manner of Reversal of ITC under Special Circumstances

Provisions under Rule 44 of the Central Goods and Services Tax (CGST) Rules, 2017 relating to “Manner of Reversal of Input Tax Credit (ITC) under Special Circumstances”, are as under:

CGST Rule 44: Manner of Reversal of Credit under Special Circumstances (Chapter-V: Input Tax Credit)

(1) The amount of input tax credit relating to inputs held in stock, inputs contained in semi-finished and finished goods held in stock, and capital goods held in stock shall, for the purposes of sub-section (4) of section 18 or sub-section (5) of section 29, be determined in the following manner, namely,-

(a) for inputs held in stock and inputs contained in semi-finished and finished goods held in stock, the input tax credit shall be calculated proportionately on the basis of the corresponding invoices on which credit had been availed by the registered taxable person on such inputs;

(b) for capital goods held in stock, the input tax credit involved in the remaining useful life in months shall be computed on pro-rata basis, taking the useful life as five years.

Illustration:
Capital goods have been in use for 4 years, 6 month and 15 days.
The useful remaining life in months= 5 months ignoring a part of the month
Input tax credit taken on such capital goods= C
Input tax credit attributable to remaining useful life= C multiplied by 5/60

(2) The amount, as specified in sub-rule (1) shall be determined separately for input tax credit of integrated tax and central tax central tax, State tax, Union territory tax and integrated tax.

(2) The amount, as specified in sub-rule (1) shall be determined separately for input tax credit of central tax, State tax, Union territory tax and integrated tax.

(2) (3) Where the tax invoices related to the inputs held in stock are not available, the registered person shall estimate the amount under sub-rule (1) based on the prevailing market price of the goods on the effective date of the occurrence of any of the events specified in sub-section (4) of section 18 or, as the case may be, subsection (5) of section 29.

(3) Where the tax invoices related to the inputs held in stock are not available, the registered person shall estimate the amount under sub-rule (1) based on the prevailing market price of the goods on the effective date of the occurrence of any of the events specified in sub-section (4) of section 18 or, as the case may be, sub-section (5) of section 29.

(4) The amount determined under sub-rule (1) shall form part of the output tax liability of the registered person and the details of the amount shall be furnished in FORM GST ITC 03, where such amount relates to any event specified in sub-section (4) of section 18 and in FORM GSTR 10, where such amount relates to the cancellation of registration.

(5) The details furnished in accordance with sub-rule (3) shall be duly certified by a practicing chartered accountant or cost accountant.

(6) The amount of input tax credit for the purposes of sub-section (6) of section 18 relating to capital goods shall be determined in the same manner as specified in clause (b) of sub-rule (1) and the amount shall be determined separately for input tax credit of IGST and CGST central tax, State tax, Union territory tax and integrated tax:

Provided that where the amount so determined is more than the tax determined on the transaction value of the capital goods, the amount determined shall form part of the output tax liability and the same shall be furnished in FORM GSTR 1.

Amendments History:

1. In sub-rule (2), the words “integrated tax and central tax” substituted with the words “central tax, State tax, Union territory tax and integrated tax” vide Notification 15/2017 Central Tax dt.01/07/2017 w.e.f. 01/07/2017.

2. In sub-rule (2), after the words “integrated tax”, for the brackets and figure “(2)”, the brackets and figure “(3)” substituted vide Notification 15/2017 Central Tax dt. 01/07/2017 w.e.f. 01/07/2017.

3. In sub-rule (6), the words “IGST and CGST” substituted with the words “central tax, State tax, Union territory tax and integrated tax” vide Notification 15/2017 Central Tax dt. 01/07/2017 w.e.f. 01/07/2017.

4. Sub rules (2) & (3) substituted w.e.f. 01/07/2017 vide Notification 17/2017 Central Tax dt. 27/07/2017.

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It may be noted that the above information is based on CBIC's Updated Compilation of CGST Rules 2017 (as notified/ amended upto 01/06/2021). However, for detailed/ official information and/ or subsequent updates, please refer relevant Notifications. E&OE

Further, it may be noted that Rules 27 to 138 (pertaining to various Chapters) of the CGST Rules, 2017 were initially notified by CBIC, along with the applicable Forms, vide Central Tax Notification 10/2017 dt. 28/06/2017: CGST (2nd Amendment) Rules, 2017, applicable w.e.f. 01/07/2017 (or as specified in respective Rules).

CBIC Updates (GST)
GST Circulars, Notifications, Press Releases, Orders, etc. issued by the Central Board of Indirect Taxes & Customs (CBIC) in different years, along with Section-wise/ Rule-wise Text of GST Acts/ Rules:
CGST: CGST Act/ Definitions, CGST Rules
IGST: IGST Act/ Definitions, IGST Rules
UTGST: UTGST Act/ Definitions, UTGST Rules
CBIC Circulars (CGST/ IGST/ UTGST): 2021, 2020, 2019, 2018, 2017
CBIC Central Tax (CGST) Notifications: 2021, 2020, 2019, 2018, 2017
CBIC Central Tax Rate (CGST Rate) Notifications: 2020, 2019, 2018, 2017
CBIC Integrated Tax (IGST) Notifications: 2020, 2019, 2018, 2017
CBIC Integrated Tax Rate (IGST Rate) Notifications: 2020, 2019, 2018, 2017
CBIC UT Tax (UTGST) Notifications: 2020, 2019, 2018, 2017
CBIC UT Tax Rate (UTGST Rate) Notifications: 2020, 2019, 2018, 2017
CBIC Compensation Cess Notifications: 2020, 2019, 2018, 2017
CBIC Compensation Cess Rate Notifications: 2020, 2019, 2018, 2017
CBIC Orders (CGST/ IGST/ UTGST): 2020, 2019, 2018, 2017
CBIC Press Releases: 2020, 2019, 2018, 2017
Note: For Official/ updated copy, please visit the CBIC website.

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  1. nabin sahoo

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