GST on Sale of Fixed Assets in India (2019 Update)


October 30, 2019

GST on Sale of Fixed Assets

Fixed assets are the assets or things purchased for a long-term purpose. These may include immovable properties such as buildings and lands as well as equipment such as machinery, computers, etc. In this post, We are going to show you about GST on Sale of Fixed Assets. Keep reading…

Before GST

Before the implementation of GST (Goods & Services Tax) in India, Fixed Assets were liable to a number of taxes, including excise and service tax. Also, there were multiple and complex restrictions on Cenvat credit availability, sale and disposal of fixed assets.

After GST

The goods & services tax regime was introduced on July 1, 2017 in India. It has brought many reliefs for the supply of fixed assets.

GST on Sale of Fixed Assets is liable to more liberal provisions as compared to the previous regime. The availability of input tax credit (ITC) on such supplies also comes with fewer restrictions and provisions for sales and disposal of fixed assets are also simplified under GST.

ITC of GST on Fixed Assets

In case there has been paid an input tax on the purchase of particular goods or services (fixed supply), the buying party is entitled to claim credit of such input tax, given that the purchased capital goods are intended to be used by the buyer on furthering his/her business. The credit amount shall be added to the e-credit ledger of the person.

In addition, credit can also be claimed for tax paid on Capital Goods that are sent to the Job Worker and intended to be used in job work processes.

ITC on Capital Goods cannot be claimed in the following cases:

  1. If depreciation has already been availed on the tax part of the supply
  2. If the purchased goods are used exclusively for personal use or other exempt supplies
  3. If the purchased goods are used partially for personal or exempt supply, then the credit can only be claimed for tax paid on business supplies
  4. ITC not allowed on the purchase of motor vehicles, aircraft and vessels, except for use for transporting passengers or goods or for the purpose of further supply
  5. ITC cannot be claimed on works contract services or goods or services for the purpose of construction of an immovable property (building)
  6. Fixed assets that are written off, stolen, lost, or destroyed

Read more: Applicability of GST on Under Construction Flats in India

ITC Reversal GST on Sale of Fixed Assets

Capital Goods on which ITC is availed are not eligible to be supplied as it is.

In case if such Capital Goods on which ITC was availed are supplied as it is, the following amount (whichever is higher) shall be payable:

  • Tax on transaction amount (as per Section 15)
  • ITC availed on input tax (reduced by 5% per quarter from the invoice date)

Recommended: GST Rate on Completed Flats or Ready to Move Apartments

Disposal (Permanent Sale) of Fixed Assets

In case if fixed assets on which ITC has been availed are sold or transferred/ disposed of, then these will be considered as supply and GST on Sale of Fixed Assets supplies will be equal to the amount of ITC on remaining life since the transaction amount or supply value is nil.


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