GST Input Credit

[Ethirajan Parthasarathy]

A person is registered for GST for payment of tax on rent from commercial property. Subsequently, he diversifies into manufacturing activity. While setting up new business unit, he receives tax invoice for supply of plant & machinery etc., and ITC on the same is duly reflected in his GSTR – 2A. Can he set off this ITC against GST payable on rental income before starting the actual manufacturing.

[KASTURI SETHI]

In my view, 'yes'. You are entitled to use the credit.There is no one to one correlation. ITC earned on goods can be used towards supply of service and vice versa.

[Ganeshan Kalyani]

I agree with the views of Sri Kasturi Sir. The input /capital goods are used in course or furtherance of business and one to one co-relation is not required. Hence, credit can be taken.

AI Summary

Input tax credit may be applied against rental GST even before manufacturing operations commence.
Input Tax Credit reflected in GSTR-2A for plant and machinery may be applied against GST payable on rental services of a registrant even before manufacturing begins, because credits for inputs or capital goods used in the course or furtherance of business do not require one-to-one correlation with specific outward supplies, subject to standard GST credit conditions and documentation requirements.