Question: Suppose if dealer has purchased capital assets and taken ITC and then later on vide notification, govt declared the said service at a lower rate without ITC, then please confirm whether we have to reverse the ITC? If yes, how and, if no, then why not? Also, how we will comply with rule 43?
Answer: In case the goods or services supplied by a person become wholly exempt due to the condition that no input tax credit can be availed as provided in the rate notification, then, as per section 18 of CGST Act, 2017, such person has to reverse or pay an amount by way of debit in the electronic credit ledger or electronic cash ledger equivalent to the credit of input tax in respect of capital goods held on such date reduced by such percentage points as prescribed under rule 44 of the CGST Rules, 2017. As per rule 44 of the CGST Rules 2017, the amount of input tax credit relating to the capitals good held in stock on such date from which supply becomes exempt, the person shall be required to reverse such amount of input tax credit which is proportionate to the remaining useful life in months of such capital assets and it shall be done on pro rata basis taking the useful life as 5 years.
 on capital goods needs reversal when GST rate is changed to a lower rate without ITC. Rule 43 compliance explained with examples.){kind=link}