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Query:
A registered person sells capital goods for a transaction value of ₹1,00,000. GST on the sale value comes to ₹18,000.
However, the remaining ITC after prescribed reduction of  on such capital goods is ₹20,000.

👉 What should be the taxable value in the tax invoice?
👉 Should the taxable value be increased to match the higher ITC reversal requirement?
👉 What is the final tax payable under Section 18(6)?

Answer:

Should the tax invoice be raised for a higher taxable value to match the ₹20,000 liability? The answer is no.

The tax invoice should always be raised on the actual transaction value of supply as per Section 15. Therefore, the invoice will show as per rule 46:

• Taxable value: ₹1,00,000; GST @18%: ₹18,000; Total invoice: ₹1,18,000

Under Section 18(6) of the CGST Act, when capital goods are supplied on which ITC has been taken, the registered person must pay whichever is higher i.e. The ITC taken on such capital goods reduced as prescribed or GST on transaction value of such capital goods.

In this case: GST on transaction value is ₹18,000 and Reduced ITC amount is ₹20,000. So the amount payable as tax becomes ₹20,000.

This means that although the invoice shows tax of ₹18,000, the law requires payment of ₹20,000. The balance ₹2,000 is paid separately, generally by reporting it as an additional liability in GSTR-3B, or by paying it through DRC-03, depending on the compliance approach being followed. Author is of view that there is no provision for ITC reversal for section 18(6).

To sum it up:
1. Invoice remains on transaction value in this case.
2. Tax liability is the higher of GST on sale value or reduced ITC.
3. Any shortfall is paid separately without changing the taxable value or output tax.