Suggestions on GST Implementation Issues 28.09.2017 by ICAI Indirect Tax Committee

Law Related Issues

2. Definition of Capital Goods

Section 2(19) of CGST Act 2017 provides that “capital goods” means goods, the value of
which is capitalised in the books of accounts of the person claiming the credit and which
are used or intended to be used in the course or furtherance of business;

Issue

Under this definition, no treatment for the items have been provided which will be expensed
during the year of purchase but not written off in the books due to their nature and use in
industry.

Suggestion

• It is suggested that an exception be provided for items which are written off during
the year of purchase in books of accounts to treat them as capital goods even if not
capitalised in books of accounts.

• Further, it is suggested that this definition may also include the goods, the value of
which is amortized over a period in the books of accounts.

• Additionally, the term “in the course or furtherance of business” be replaced with
“for the purpose of business” so that no scope for restriction of credit is left. Same
change may also be done for definitions of “Input” & “Input Services”, “Outward
Supply” and also in Schedule I & II.
• The term “value” be replaced with the words ‘purchase consideration’ for better
clarity.

Read Suggestions on GST Implementation Issues 28.09.2017 by ICAI Indirect Tax Committee

Related Topic on GST