GST credit in respect of capital goods for fresh registrations

In this blog, we look at a query on whether availability of GST credit in respect of capital goods held by a business concern that has newly obtained registration.



We are a start-up  in the IT-service sector and have purchased certain capital goods such as servers, furniture, etc. over a couple of months prior to and after GST implementation. We have obtained GST registration recently. Will we be entitled to avail credit of the GST paid on such purchases?



A person who has applied for registration within 30 days of becoming liable for registration is entitled to take credit of input tax in respect of inputs held in stock (as such / contained in semi-finished/ finished goods) on the day immediately preceding the date from which he becomes liable.

However, in the given case, we understand that the goods purchased are capital goods. There is no provision under the GST Laws that permits availing of credit in respect of capital goods procured before the date of obtaining registration. Therefore, credit in respect of taxes paid on purchase of servers, furniture, and any other goods purchased by you capitalised in the books of account, cannot be availed where the registration under the GST Law was granted after the date of purchase. If any such goods have been purchased after the date of grant of GST registration, and the tax invoice contains the GSTIN of your company, then the credit in respect of such capital goods can also be availed, subject to conditions as applicable to any other goods.

Legislative reference: Section 18 read with Section 16 and 2(19) of the CGST Act, 2017. 


Authors: Meghana Belawadi and NR Badrinath



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