TaxTMI 
TaxTMI 
Input Tax Credit
X X X X Extracts X X X X
X X X X Extracts X X X X
.... person is entitled to take credit of input tax charged on supply of goods or services or both to him which are used or intended to be used in the course or furtherance of business, subject to other conditions and restrictions. Q 6. What are the conditions necessary for obtaining ITC? Ans. Following four conditions are to be satisfied by the registered taxable person for obtaining ITC: (a) he is in possession of tax invoice or debit note or such other tax paying documents (such as bill of entry or any other document prescribed under the Customs Act, ISD invoice as prescribed in Rule 36(1) of the CGST Rules). (b) he has received the goods or services or both; (c) the supplier has actually paid the tax charged in respect of the supply to the government; and (d) he has furnished the return under section 39. Q 7. Whether all particulars necessary in the documents- tax invoice or debit note or such other tax paying documents for claiming ITC? Ans. If the said document does not contain all the specified particulars but contains the details of the amount of tax charged, description of goods or services, total value of supply of goods or services or both, GSTIN of the supplier and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of the supply and not included in the price actually paid or payable for the goods or services or both are added in the value of a supply. In such cases, no consideration is to be paid to the supplier. Whether ITC is available in such cases? Ans. Value of supplies on account of any amount added in accordance with the provisions of section 15(2)(b) is deemed to have been paid for the purposes of the second proviso to section 16(2). Therefore, ITC is admissible. (Second Proviso to Rule 37 of CGST Rules, 2017) Q 15. Who will get the ITC where goods have been delivered to a person other than taxable person ('bill to'- 'ship to 'scenarios)? Ans. It would be deemed that the registered person has received the goods when the goods have been delivered to a third party on the direction of such taxable person. So ITC will be available to the person on whose order the goods are delivered to third person. Q 16. Who will get the ITC where services are provided by the supplier to a person on the direction of and on account of such registered person? Ans. It would be deemed that the registered person has received the services where the services are provided by the supplier to any person on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of passengers or goods or is providing the services of imparting training on motor vehicle or further supply of such vehicles. Q 21. Sometimes goods are destroyed or lost due to various reasons? Can a person take ITC to the extent of such goods? Ans. No, a person cannot take ITC with respect to goods lost, stolen, destroyed or written off. In addition, ITC with respect of goods given as gifts or free samples are also not allowed. [Section 17(5)(h) of CGST Act] Q 22. Can a registered person get ITC with respect of goods or services used for construction of a building for business purposes? Ans. No. ITC on goods or services by a person for construction of immovable property, other than plant and machinery, is not allowed. Plant and machinery cover only apparatus, equipment, and machinery fixed to earth by foundation or structural support, and excludes land and building, among other things. Q 23. What is the ITC entitlement of a newly registered person? Ans. A person applying for registration can take input tax credit of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... preceding the date from which he ceases to be eligible for composition scheme. The manner of calculation of eligible credit is provided in CGST Rules. This is subject to further condition that the invoices pertaining to such inward supplies should not be more than a year old. Q 28. Mr. A, a registered person was paying tax under composition scheme upto 30th July, 2017. However, w.e.f 31st July, 2017, Mr. A becomes liable to pay tax under regular scheme. Is he eligible for ITC? Ans. Mr. A is eligible for input tax credit on inputs held in stock and inputs contained in semi-finished or finished goods held in stock and capital goods (reduced by such percentage points as has been prescribed by the ITC Rules) as on 30th July, 2017. The Input Tax Credit on capital goods shall be claimed after reducing the tax paid on such capital goods by five percentage points per quarter of a year or part thereof from the date of invoice or such other documents on which the capital goods were received by him. This is subject to further condition that the invoices pertaining to such inward supplies should not be more than a year old. Q 29. Mr. B applies for voluntary registration on 5th July, 2017 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id return? Ans. In case of mismatch, the communication would be made to the both parties. If the mismatch is not rectified, then the amount will be added to the output liability of recipient in the return for the month succeeding the month in which discrepancy is communicated. Q 33. What will be the tax impact when capital goods on which ITC has been taken are supplied by taxable person? Ans. In case of supply of capital goods or plant and machinery on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery, as reduced in the manner prescribed under sub-rule 6 of rule 44 of the CGST Rules, 2017, or the tax on the transaction value of such capital goods or plant and machinery, whichever is higher. But in case of refractory bricks, molds and dies, jigs and fixtures when these are supplied as scrap, the person can pay tax on the transaction value. Q 34. Whether input tax credit can be taken on payment of tax after adjudication? Ans. Input tax credit cannot be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand....
X X X X Extracts X X X X
X X X X Extracts X X X X
....actions in securities; * Sale of land; and * Subject to Para 5(b) of Schedule II, sale of building. However, the "value of exempt supply'' shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule (Sale of Land / building). [The CGST (Amendment) Act, 2018] Q 37. Where goods or services received by a registered person are used partly for the purpose of business and partly for other purposes, whether the input tax credit is available to the person? Ans. The input tax credit of goods or services or both attributable only to the purpose of business can be taken by registered person. The manner of calculation of eligible credit is provided in rule 42 of the CGST rules. Q 38. Are there any special provisions in respect of banking companies? Ans. A banking company or a financial institution including a non-banking financial company engaged in supply of specified services would either avail proportionate credit or avail 50% of the eligible input tax credit. The option once exercised cannot be withdrawn in the same year. The restriction of 50% will not apply to the tax paid on supplies made by on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns unutilized in its electronic credit ledger to the new entity, provided that there is a specific provision for transfer of liabilities. (Section 18(3) of the CGST Act, 2017) Q 43. What are the conditions to be fulfilled for transfer of ITC in respect of sale, merger or amalgamation etc.? Ans. The conditions to be fulfilled in case of transfer of credit on account of sale, merger, amalgamation, demerger, lease, transfer of business are as under: (a) Form GST ITC-02 containing the details of the sale, merger, amalgamation, de-merger, lease, transfer of business be furnished (b) A certificate issued by a practicing Chartered/ Cost Accountant certifying that the sale, merger, amalgamation, de-merger, lease, transfer of business has been done along with a provision for transfer of liabilities (c) Transferee to accept the details submitted in GST ITC-02. Post acceptance, the credit specified in Form GSTR ITC-02 will be credited to the electronic credit ledger of transferee. (d) The inputs and capital goods so transferred are to be accounted in the transferee's books (e) In case of demerger, the ITC shall be apportioned in the ratio of the value of assets of the new units as spec....