Whether the registered person can avail the benefits of input tax credit and depreciation on the tax component of capital goods and plant and machinery?

No, Section 16(3) provides that input tax credit will not be allowed on the tax component of cost of capital goods/ plant and machinery, if the depreciation on the said tax component is claimed under the provision of Income Tax Act, 1961 by the taxable person. Therefore, the registered person has an option to either claim depreciation (under the Income Tax Act, 1961) or claim credit under the GST law, on the said tax component.
For example:
Cost of Asset= 1,000/-
Tax = 100/-
Total = 1,100/-
If depreciation is charged on 1,000/-, then credit will be available under the GST law and if depreciation is charged on 1,100/- then credit will not be available.

(ICAI FAQ PUBLICATION 06-09-2017 INPUT TAX CREDIT: FAQ NO.9)

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