ITC input Claim on Fixed Assets

A capital asset is anything a company uses to make goods or services, such as buildings, machines, equipment, vehicles, and tools. For example, a blast furnace used in the iron and steel industry is a capital asset for the steel manufacturer.

Difference between capital goods & other inputs

Capital goods are not consumed when the final product is made. They are not consumed in a single year of production. Therefore, they cannot be fully deducted as business expenses in the year of purchase. Instead, they are depreciated over the course of their useful lives. A part of the cost of each asset is recognized each year by depreciation, amortization, and depletion.  

Whenever you buy anything, you need to pay GST. Afterward, you can claim the input tax credit for the GST paid on your purchases. If you are purchasing machinery for your factory, you will also have to pay the applicable GST rate. You can claim GST as an input credit in the same way you can claim GST as an output credit.

How to claim ITC on Fixed assets/Capital goods in Bookkeeper

First, we need to create a Fixed asset account. Go to All Accounts > New Account (Alt + A)
then, Go to Transactions > Create Purchase (F9)

Here, you need to select the Fixed asset account that you have created in place of the Purchase account field, and then the Supplier's account from which you have purchased. Then enter the amount in the column and apply tax from the 'On total' option and click on save.

Report- ITC input details can be viewed in the ‘All other ITC’ section of the GSTR 3B report of the same month.