GST Input Credit

[Ethirajan Parthasarathy]

A supplier is engaged in business of knitting and fabric manufacture.

For supply of fabric the GST output rate is less than input tax paid for inputs.

Till 27-07-18 the supplier was taking tax credit of full input tax credit for all inward purchase /services against out tax payable on knitting (labor charge) and fabric sale.

As per notification No 20/2018-Central Tax (Rate) dated 26.07.2018 date of CGST (Rate) the unutilized input tax on certain inputs for fabric activity available as o 31-08-18 will LAPSE.

I am of the opinion that the above notification regarding Lapsing is applicable for limited purpose of claiming refunds only.

The supplier concerned is still eligible for taking input credit of balance available as on 31-07-18 against output tax knitting and fabric sale from 1-08-18

Is my view correct

[DR.MARIAPPAN GOVINDARAJAN]

Yes. correct.

[ANITA BHADRA]

A representation has been given from Northern India Chamber of Commerce & Industry to Hon’ble Finance Minister ( attached herewith,) by which the chamber has highlighted the issue which shall be faced by the industries due to the lapse of credits on inputs against outward supplies of fabric as per Notification 20/2018-Central Tax(rate) dated 26-07-2018.

The content in the representation provides absolute clarity for interpretation and understanding practical aspects of the notification

Regards

[PAWAN KUMAR]

As per this not.no.20/2018 goods mentioned at s.no.1 to 8 in table of not.no.5/2017 , refund of unutilized itc accumulated due to inverted tax rate shall be applicable from 1August 2018 and itc accumulated up to 31st July 2018 on such goods shall be lapsed.

[KASTURI SETHI]

I support the views of the experts.

AI Summary

Fabric Manufacturer Questions GST Input Credit Lapse Under Notification No 20/2018-Central Tax (Rate); Industry Expresses Concerns A supplier involved in knitting and fabric manufacturing raised a query regarding the Goods and Services Tax (GST) input credit, noting that the output tax rate on fabric is less than the input tax paid. According to Notification No 20/2018-Central Tax (Rate), unutilized input tax on certain inputs for fabric will lapse by 31-08-18. The supplier believes this applies only to refund claims, not ongoing input credit usage. Responses from various forum members, including experts, confirm the supplier's understanding and highlight industry concerns regarding the notification's impact on input credits for fabric manufacturers.