Instagram video transcript

Selling an old business asset? Don't miss this GST trap. Just paying GST on sale value might not be enough. Before selling machines or computers, ask yourself, did you claim GST credit when you purchased them? If yes, section 18.6 applies. Suppose you bought a machine for 10 lakh and claimed 1.8 lakh GST credit.

After 3 years, you decide to sell it. Calculation 1. GST on the sale price. If you sell it for 3 lakh at 18%, that comes to 54,000 rupees. Calculation 2 GST assumes a useful life of 60 months. Since 22 months are remaining, we calculate the credit reversal. 1.8 lakh multiplied by 22 divided by 60 equals 66,000 rupees.

This is your second number. Now compare. Since 66,000 is higher than 54,000, the law requires you to pay the higher amount. You pay 66,000. The exception? For scrap sales of molds, dyes or jigs, this comparison isn't required. You just pay GST on the transaction value. Always run this calculation before selling an asset on which you claimed credit to avoid unexpected costs.

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