Claim of ITC by a Commercial Photographer

[Rajan Atrawalkar]

Can a commercial photographer avail ITC of Camera, Lighting System, Computer, Electronic display boards even though they are capitalized? Is there any way out to claim ITC on the same? These are the only inputs used by him in the course of furtherance of business.

[Pradeep Reddy Unnathi Partners]

ITC of GST paid on these goods can be availed, as long as such GST is not capitalized in the books of accounts along with the taxable value of goods. This is because, ITC and depreciation are mutually exclusive

For eg: Taxable value of camera is 1 lakh and GST thereon is 18,000. ITC on GST of 18,000 can be availed as long as the value capitalized in the books of accounts is 1 lakh.

[Rajan Atrawalkar]

Actually, my query in relation to New Registration (Sec 18(1)(a) & (b)).

Sorry for incomplete drafting the query.

[KASTURI SETHI]

Sh.Rajan Atrawalkar Ji,

The condition of 'capitalization' exists even in the scenario of revised query.

[Rajan Atrawalkar]

Section 18 (1) (a) & (b) says”…… shall be entitled to take credit of input tax in respect of inputs held in stock ….”. So, to me, the ITC is available only in respects of Inputs.

Thus, the words “capital goods” are missing in (a) and (b) while The words “and Capital goods” are added in 18(1)(C )& (d).

Again , “Inputs”, as per section 2(59) “means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business”

Summarily, to me, capital goods are categorically excluded for claiming ITC in the case of Registration taken voluntarily or on exceeding prescribed limits.

[Pradeep Reddy Unnathi Partners]

Sir

Sec 18(1)(a) & (b)- applies to availing ITC on goods procured before obtaining registration and lying in stock as on the date of obtaining registration, it is a special provision. Such provision allows availing of ITC of inputs held in stock as on the date of registration, however, it does not allow ITC on capital goods ( meaning those goods capitalized in books of accounts) held as on the date of registration.

Therefore, ITC on capital goods held by the taxpayer as on the date of registration (i.e. procured before the registration date) cannot be availed. In other words, such ITC on capital goods can be availed only if they are procured after obtaining GST registration.

[KASTURI SETHI]

Although the following case pertains to pre-GST era, yet it is worth reading.

"Inputs capitalized in balance sheet for income tax purpose would not mean they will be considered as capital goods for central excise duty purposes - It was more so as no depreciation was claimed on capitalized inputs - Rule 3 of Cenvat Credit Rules, 2004 - Section 35F of Central Excise Act, 1944. [para 2]. "-------------------- CESTAT Ahmedabad reported as in the case of Shree Rama Multi-Tech Ltd. Vs. CCE - 2008 (9) TMI 750 - CESTAT, AHMEDABAD

[Shilpi Jain]

Provisions under GST are clear that CG means those which are capitalised in the books.

If these were purchased in the recent past you could consider not capitalising them to avail credit. Though concurrence of your auditor will also be of utmost importance.

[Padmanathan KV]

Learned Shilpi Ma'am,
In most cases, it will be litigious under Income Tax law to take such a position.

AI Summary

Photographer's Input Tax Credit Eligibility on Capital Goods under GST: Section 18(1) Clarifies Conditions and Conflicts with Income Tax Laws. A commercial photographer inquired about the eligibility to claim Input Tax Credit (ITC) on capitalized items like cameras and lighting systems under GST. Responses clarified that ITC can be claimed if the GST is not capitalized along with the goods' value in the books. Section 18(1)(a) and (b) allows ITC on inputs held in stock at registration but excludes capital goods. ITC on capital goods is only available if procured post-registration. Discussions also highlighted potential conflicts with income tax laws if capital goods are not capitalized to claim ITC.