As per the Draft Input Tax Credit Rules, when regular taxable person changes to composition scheme, for the capital goods remaining in stock the input tax credit to be reversed, is based on the residual life of the asset as 5 years and input tax credit will be computed on pro-rata basis for the remaining life of the asset.
GST Tip – 199
The input service distributor (ISD) will distribute the credit to all the recipients where the inputs are consumed on pro rata on the basis of the turnover. The recipient can be registered under GST or not registered under GST or engaged in making exempt supply.
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