Introduction:
The GST Act came in force from 1st July, 2017. There were many interpretation issues with respect to the definitions, glossary and terms use in the law. Since, such definitions were adopted from various legacy laws in India prior to GST; such as Service Tax, State VAT, Central Excise Act, Luxury Tax, Entertainment Tax, etc. it was difficult to make applicable one definition for different sectors. Hence, some modifications from existing definitions were made. Therefore, it was important to established a nexus of the terms used in the GST definitions. The definition discussed here is “Capital goods”.
So what do you mean by “Capital goods”?
“Capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended
to be used in the course or furtherance of business;
Conclusion:
Hence, It is understood that value of goods which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended
to be used in the course or furtherance of business; is known as “Capital goods”.