Input tax credit reversal when finished goods are destroyed
Video Tutorial by CA Satbir Singh in Hindi
Q. We are manufacturers of chemicals. The goods produced in a particular batch are not of correct quality. We cannot sell it or use it. We want to destroy them for quality reasons. Does the GST law allow it? Do we have to inform or take permission from the jurisdictional authorities?
Under the GST law, you do not need to inform or take permission from any authorities for destroying the finished goods.
However, as per Section 17(5) (h) of the CGST Act, 2017, input tax credit shall not be available in respect of goods destroyed.
So, you have to reverse the credit taken in respect of inputs and input services used in the manufacture of goods destroyed.