Jayakumar Textiles Ltd., purchased a machinery on 12 th August, 2017 for ₹ 12 lakhs (excluding GST). The company put the machinery to use after the purchase and availed input tax credit for the eligible amount. The machi

Section 18(6) of the CGST Act, 2017 read with rule 40(2) the CGST Rules, 2017 provide that if capital goods or plant and machinery on which input tax credit has been taken are supplied outward by the registered person, he must pay an amount that is the higher of the following: (a) Input tax credit taken on such goods reduced by 5% per quarter of a year or part thereof from the date of issue of invoice for such goods, or (b) Tax on transaction value. Jayakumar Textiles Ltd. is required to take the steps in the light of above provisions for payment of tax at the time of sale of second hand machinery. The amount payable on sale of machinery shall be: Particulars Amount (₹) Amount (₹) Input tax credit taken on machine (1200000 x 18%) 2,16,000 Less: Input tax credit to be reversed @ 5% per quarter for the period of use of machine from August, 2017 to May, 2018 (i) For the year 2017-18 = (216000 x 5%) x 3 Qtrs. 32,400 (ii) For the year 2018-19 = (216000 x 5%) x 1 Qtr. 10,800 43,200 Amount required to be paid as per (a) above 1,72,800 Tax leviable on transaction value (900000 x 18%) as per (b) above 1,62,000 Amount payable towards sale of machine being higher of ₹ 1,72,800/- and ₹ 1,62,000/- 1,72,800