Section 43(1) in The Central Goods and Services Tax Rules, 2017
(1)Subject to the provisions of sub-section (3) of section 16, the input tax credit in respect of capital goods, which attract the provisions of sub-sections (1) and (2) of section 17, being partly used for the purposes of business and partly for other purposes, or partly used for effecting taxable supplies including zero rated supplies and partly for effecting exempt supplies, shall be attributed to the purposes of business or for effecting taxable supplies in the following manner, namely, -(a)the amount of input tax in respect of capital goods used or intended to be used exclusively for non-business purposes or used or intended to be used exclusively for effecting exempt supplies shall be indicated in Form GSTR-2 [and Form GSTR-3B] [Inserted by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).] and shall not be credited to his electronic credit ledger;(b)the amount of input tax in respect of capital goods used or intended to be used exclusively for effecting supplies other than exempted supplies but including zero-rated supplies shall be indicated in Form GSTR-2 [and Form GSTR-3B] [Inserted by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).] and shall be credited to the electronic credit ledger;[Explanation. - For the purpose of this clause, it is hereby clarified that in case of supply of services covered by clause (b) of paragraph 5 of the Schedule II of the said Act, the amount of input tax in respect of capital goods used or intended to be used exclusively for effecting supplies other than exempted supplies but including zero rated supplies, shall be zero during the construction phase because capital goods will be commonly used for construction of apartments booked on or before the date of issuance of completion certificate or first occupation of the project, whichever is earlier, and those which are not booked by the said date.] [Inserted by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).](c)[ the amount of input tax in respect of capital goods not covered under clauses (a) and (b), denoted as 'A, being the amount of tax as reflected on the invoice, shall credit directly to the electronic credit ledger and the validity of the useful life of such goods shall extend upto five years from the date of the invoice for such goods: [Substituted by Notification No. G.S.R. 199(E), dated 23.3.2020 (w.e.f. 19.6.2017).]Provided that where any capital goods earlier covered under clause (a) is subsequently covered under this clause, input tax in respect of such capital goods denoted as 'A' shall be credited to the electronic credit ledger subject to the condition that the ineligible credit attributable to the period during which such capital goods were covered by clause (a),denoted as 'Tie', shall be calculated at the rate of five percentage points for every quarter or part thereof and added to the output tax liability of the tax period in which such credit is claimed:Provided further that the amount 'Tie' shall be computed separately for input tax credit of central tax, State tax, Union territory tax and integrated tax and declared in FORM GSTR-3B.Explanation. - An item of capital goods declared under clause (a) on its receipt shall not attract the provisions of sub-section (4) of section 18, if it is subsequently covered under this clause.](d)[the aggregate of the amounts of 'A' credited to the electronic credit ledger under clause (c) in respect of common capital goods whose useful life remains during the tax period, to be denoted as 'Tc', shall be the common credit in respect of such capital goods: [Substituted by Notification No. G.S.R. 199(E), dated 23.3.2020 (w.e.f. 19.6.2017).]Provided that where any capital goods earlier covered under clause (b) are subsequently covered under clause (c), the input tax credit claimed in respect of such capital good(s) shall be added to arrive at the aggregate value 'Tc';](e)the amount of input tax credit attributable to a tax period on common capital goods during their useful life, be denoted as 'Tm' and calculated as-Tm = Tc÷60[Explanation. [Inserted by Notification No. G.S.R. 199(E), dated 23.3.2020 (w.e.f. 19.6.2017).] - For the removal of doubt, it is clarified that useful life of any capital goods shall be considered as five years from the date of invoice and the said formula shall be applicable during the useful life of the said capital goods.][***] [Omitted 'clause (f)' by Notification No. G.S.R. 199(E), dated 23.3.2020 (w.e.f. 19.6.2017).](g)the amount of common credit attributable towards exempted supplies, be denoted as 'Te', and calculated as -Te = (E÷ F) x Trwhere,'E' is the aggregate value of exempt supplies, made, during the tax period, and'F' is the total turnover [in the State] [Inserted by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).] of the registered person during the tax period:[Provided that in case of supply of services covered by clause (b) of paragraph 5 of the Schedule II of the Act, the value of 'E/F' for a tax period shall be calculated for each project separately, taking value of E and F as under:E= aggregate carpet area of the apartments, construction of which is exempt from tax plus aggregate carpet area of the apartments, construction of which is not exempt from tax, but are identified by the promoter to be sold after issue of completion certificate or first occupation, whichever is earlier;F= aggregate carpet area of the apartments in the project;Explanation1. - In the tax period in which the issuance of completion certificate or first occupation of the project takes place, value of E shall also include aggregate carpet area of the apartments, which have not been booked till the date of issuance of completion certificate or first occupation of the project, whichever is earlier.Explanation 2. - Carpet area of apartments, tax on construction of which is paid or payable at the rates specified for items (i), (ia), (ib), (ic) or (id), against serial number 3 of the Table in notification No. 11/2017-Central Tax (Rate) published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated 28th June, 2017 vide GSR No. 690 (E) dated 28th June, 2017, as amended, shall be taken into account for calculation of value of 'E' in view of Explanation (iv) in paragraph 4 of the notification No. 11/2017-Central Tax (Rate) published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) dated the 28th June, 2017 vide GSR No. 690 (E) dated 28th June, 2017, as amended.] [Inserted by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).][Provided further] [Substituted 'Provided' by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).] that where the registered person does not have any turnover during the said tax period or the aforesaid information is not available, the value of 'E/F' shall be calculated by taking values of 'E' and 'F' of the last tax period for which the details of such turnover are available, previous to the month during which the said value of 'E/F' is to be calculated;Explanation. - For the purposes of this clause, it is hereby clarified that the aggregate value of exempt supplies and the total turnover shall exclude the amount of any duty or tax levied under entry 84 [and entry 92A] [Inserted by Notification No. G.S.R. 63(E), dated 29.1.2019 (w.e.f. 19.6.2017).] of List I of the Seventh Schedule to the Constitution and entry 51 and 54 of List II of the said Schedule;(h)the amount Te along with the applicable interest shall, during every tax period of the useful life of the concerned capital goods, be added to the output tax liability of the person making such claim of credit.(i)[ The amount Te shall be computed separately for input tax credit of central tax, State tax, Union territory tax and integrated tax and declared in Form GSTR-3B.] [Inserted by Notification No. G.S.R. 249(E), dated 29.3.2019 (w.e.f. 19.6.2017).]
