Whether Input Tax Credit to be reversed or not of the Goods destroyed due to lockdown ?
Goods of many taxpayers have destroyed or expired due to lockdown. They had paid Goods and Services Tax (GST) on it and taken the input tax credit. Many manufactures had given GST on the raw materials which are used to make the finished goods. Now the raw material has expired or gone bad.
That goods will not be come under sale due to destroyed.
The problem is now whether taxpayers will have to reverse the input of GST or not on the destroyed or expired goods ?
Section 17 of CGST Act, 2017 deals with the circumstances where input tax credit not available to taxpayers.
Tax credit shall not be available to a registered person on goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.
They now must reverse the input tax credit under the current law.
Businesses is already in financial straits. After that the GST cost on these expired or destroyed goods can put the business more financially strapped.
Now taxpayers are looking at the government to sought a tweaking in the GST law temporarily due to Covid-19 pandemic.