Asset Disposals, Impairments, and Write-Offs: Calculating Capital Gains and GST Impact

The Complexity of Asset Decommissioning

When an organization sells, scraps, or abandons a capital asset, finance teams must execute multi-layered calculations: calculate depreciation up to the exact date of disposal, derecognize the asset's gross cost and accumulated depreciation, determine the accounting profit/loss, and calculate statutory tax adjustments.

GST Reversal on Capital Goods (Section 18(6))

Under GST rules, if capital goods on which Input Tax Credit was claimed are sold, the taxpayer must pay an amount equal to the ITC claimed reduced by 5 percentage points per quarter of usage OR the tax on transaction value, whichever is higher.

Relaso Fixed Asset Platform automates disposal calculations, prints compliant tax invoices for capital goods sales, and posts instant journal entries to the general ledger.