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

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.