ITC on goods in Transit

[DK AGGARWAL]

Respected Sir/Madam

Kindly guide on the following issue

Goods dispatched on 31st of March and received in April,

1--Can we claim ITC in the month of March as per 2B

2---Or we should claim ITC as per books in the month of April, the month in which goods received. If so it would be mismatch of 2B then how to satisfy the notice from GST people.

The goods in transit can be a regular feature in many business when goods are received in next of the dispatch month.

Please explain in view of recent amendments of claiming ITC as per 2B only.

Regards

D K Aggarwal

[Ravinesh Sinha]

ITC on receipt of actual receipt of goods provided upon the last lot or installents in case goods are receivable in lots or installments

However if the goods are for transit sale deeming provision of receipt of goods as per explanation to section 16(2)(b) is applicable

[KASTURI SETHI]

You are advised to follow/prefer Section 16 (2) (b) of CGST Act. First comply with all the conditions mentioned in Section 16(2). Thereafter, you are entitled to avail ITC.Such practice will be fool-proof. Primary requirement is the compliance of Section 16(2). Otherwise also in view of such regular feature in your business, the possibility of recovery of interest and imposition of penalty cannot be ruled out.

 

 

[Shilpi Jain]

Agree. Avail the credit when received the goods. Make it a habit to have a reco sheet in place every month for 2b vs 3b with proper reasons, so that it can be submitted whenever questions by the department

AI Summary

Input Tax Credit timing: claim on actual receipt unless transit-sale deeming conditions permit earlier entitlement. Entitlement to Input Tax Credit for goods dispatched before month-end but received later depends on actual receipt unless the deeming provision for transit sales applies. Credit for lots or installments is claimable on receipt of the final lot; otherwise claim when goods are received. Taxpayers must satisfy all statutory conditions before availing credit, keep monthly reconciliations between electronic purchase data and books, and retain documentation to mitigate interest and penalty exposure and to respond to departmental notices.