TaxTMI 
TaxTMI 
In-Depth Analysis of Input Tax Credit under the GST Act: Section 18 – Availability of Credit in Special Circumstances
X X X X Extracts X X X X
X X X X Extracts X X X X
....n-Depth Analysis of Input Tax Credit under the GST Act: Section 18 – Availability of Credit in Special Circumstances<br>By: - Rajagopal K<br>Goods and Services Tax - GST<br>Dated:- 10-7-2025<br>Section 18 - Availability of Credit in Special Circumstances Section 18 provides for input tax credit (ITC) availability in specific situations where a person becomes eligible under special circumstances....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The section outlines when ITC can be claimed and the conditions for doing so. Sub-section (1): Eligibility to Claim ITC in Special Cases A registered person shall be entitled to take input tax credit in the following cases: Clause (a): New Registration When a person becomes liable to register under GST and obtains registration, they can claim ITC on inputs held in stock, inputs contained in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....semi-finished or finished goods, held on the day immediately before the date of registration. Clause (b): Voluntary Registration When a person voluntarily takes registration (though not liable), they can claim ITC on: * Inputs held in stock, * Inputs contained in semi-finished and finished goods, as on the day immediately before the date of registration. Clause (c): Exemp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t to Taxable Supply When a registered person ceases to make exempt supplies and starts making taxable supplies, they can claim ITC on: * Inputs held in stock, * Inputs in semi-finished or finished goods, * Capital goods (reduced by prescribed percentage), as on the day immediately before the date of change. Clause (d): Composition to Regular Taxpayer When a person switches from the compos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ition scheme under Section 10 to the normal scheme, they can claim ITC on: * Inputs in stock, * Inputs in semi-finished or finished goods, * Capital goods (reduced by prescribed percentage), held on the day immediately before the switch. Sub-section (2): Time Limit to Claim Credit The input tax credit under sub-section (1) can be claimed within 30 days from the date of becoming eligible, o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r within a further period as extended by the Commissioner. Note: This time frame is strict and non-compliance results in loss of entitlement to claim ITC under this section. Sub-section (3): Conditions for Capital Goods If a registered person has claimed ITC on capital goods under sub-section (1), and such capital goods are later supplied, the person must pay tax on such supply as per Section 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8(6). Sub-section (4): Apportionment and Blocked Credits The provisions of: * Section 16 (Eligibility and Conditions), and * Section 17 (Apportionment and Blocked Credits) shall apply mutatis mutandis to the claims made under this section. This ensures consistency in ITC treatment, even in special cases. Sub-section (5): ITC on Transfer of Business In case of transfer of business, i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncluding: * Sale, * Merger, * Demerger, * Amalgamation, * Lease, or * Transfer of ownership, The unutilized ITC in the electronic credit ledger may be transferred to the new entity, provided: * There is a specific provision in the scheme of arrangement, and * The transferor has furnished all required details. Such transfer is subject to prescribed conditions. Sub-section (6): Su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pply of Capital Goods or Plant and Machinery When a registered person supplies capital goods or plant and machinery, on which ITC was claimed, they must pay an amount equal to: * ITC taken on the said asset reduced by the prescribed percentage, or * The tax on transaction value (whichever is higher), as per Section 15 of the Act. This ensures the go....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vernment recovers ITC when such assets are sold. Summary Table: Key Situations under Section 18 Clause Situation Eligible ITC On Cut-off Date 18(1)(a) Liable to register and registered Inputs & stock Day before registration 18(1)(b) Voluntary registration Inputs & stock Day before registration 18(1)(c) Exempt to taxable Inputs, stock, capital goods Day before exemption ends 18(1)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(d) Composition to normal Inputs, stock, capital goods Day before switch Important Notes: * ITC on capital goods is subject to reduction by prescribed percentage (for wear and tear). * If the above time limits or conditions are not followed, the credit is forfeited. * The section ensures seamless credit flow during transitions in a taxpayer's status. Thank You for Reading Thank you for....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... taking the time to read this article. I appreciate your attention and interest in the topic. I hope the insights shared here prove valuable in your professional endeavours. Your feedback or perspective is always welcome. please feel free to connect or continue the conversation.<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....