In the recent past there is a lot of confusion as to whether GST has to be paid on sale of Capital goods or not. These are the scenarios where GST will attract or not for the sale of Capital Goods.

1. Capital goods supplied for a consideration on which ITC has been availed.
2. Capital goods supplied for a consideration on which ITC has not been availed.
3. Capital goods supplied for NIL consideration on which ITC has been availed.
4. Capital goods supplied for NIL consideration on which ITC has not been availed.
5. Supply of Motor Vehicles.

Let us understand these scenarios briefly.

1. Capital goods supplied for a consideration on which ITC has been availed.

When a Capital good on which ITC has been availed is supplied, GST will attract on that supply.

So, the GST amount payable is higher of the following.
a) GST on Transaction Value. Or
b) ITC attributable to the remaining life of the asset (out of 5 years or 60 months*).
Note: Transaction Value is the Consideration amount.
E.g.:

Here GST payable will be higher of GST on Transaction Value ie.,9,000.00 (50000*18%) or the ITC pertaining to remaining life of an asset. ie.,9,900.00 (18,000.00*33/60).
In this scenario it is evident that we have to pay an amount of Rs.9,900 on supply of the asset.
*As per the Section 18(6), read with Rule 44(6) tax has to be paid for Capital Goods supplied before the expiry of 5 years.

2.Capital goods supplied for a consideration on which ITC has not been availed

As per Sec 2(19) of CGST Act, it is truly clear that GST is payable only on the supply of capital goods on which ITC was availed. But as per Section 7 of CGST Act, GST is payable even though ITC has not been availed.
So, considering the both Sections, it is concluded that it is liable to pay the GST on the Transaction Value, even though ITC has not been availed.

3.Capital goods supplied for NIL consideration on which ITC has been availed.

As per Section 7 of CGST Act, it is truly clear that Supply without Consideration will be treated as Supply under GST, as it is specifically mention in the Schedule-I.
GST has to be paid on supply of Capital Goods for NIL Consideration on which ITC has been availed.
So, the GST amount payable is higher of the following.

a) GST on Transaction Value (NIL) Or
b) ITC attributable to the remaining life of the asset (out of 5 years or 60 months*).

4.Capital goods supplied for NIL consideration on which ITC has not been availed.

This is relatively a better scenario where no confusion is there. The cases when Capital Good is lost, stolen, damaged in fire, obsolete, given as gift etc.., all these cases will come under this scenario.
Here, GST is not liable to be paid on supply of Capital Goods when we have not claimed any ITC and we have not received any consideration for that supply.

5.Supply of Motor Vehicles.

In this case, we have to pay the GST on supply of Motor Vehicle even though we have not availed the ITC.
There are Two scenarios i.e.., whether the motor vehicle is purchased before the GST Regime or after the GST Regime.

1. Motor Vehicle purchased before GST Regime : As per Notification No.37/2017-CGST Rate , If any Motor Vehicle is purchased before GST Regime and CENVAT Credit was not availed, the tax rate will be 65% of the normal rate .As per Notification No.7/2017-Compensation Cess Rate, Compensation Cess will also be 65% of normal rate only .
Provided that nothing contained in this notification shall apply on or after1st July 2020. So, the Tax rate will be 100 % of the normal rate for transactions happening on or after 01-07-2020.
2. Motor Vehicle purchased after GST Regime : As per Notification No.8/2018-CGST Rate, If any Motor Vehicle is purchased after GST Regime and ITC was not availed , then GST Rate has been reduced considerably on basis of engine capacity and length .Here, Compensation Cess is not required to pay .

Here, the GST Rate should apply to the Margin of Supply.
Margin of Supply = Transaction Value-Purchase Price
Note: If depreciation rate is mentioned in the Income Tax Act, then Purchase price will be the WDV of that asset. Otherwise we have to consider the Original Purchase Price

Disclaimer:“Information contained herein is for informational purposes only and should not be used in deciding any particular case. The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts have been made to provide authentic information, it is suggested that to have better understanding and obtaining professional advice after thorough examination of particular situation.”