Goods and Services Tax

Input Tax Credit under GST

Goods and Services Tax – GST – By: – Surabhi Bohra – Dated:- 2-12-2017 – Goods and Service Tax (GST) in India provides for seamless and continuous flow of input tax credit (ITC). In the earlier tax regime, cascading of tax is significant due to non-availability of ITC at various stages. Credit of taxes like CST, Entry Tax, and Luxury Tax was not available which became cost of the goods/services. Credit of VAT was not available to manufacturers and service providers and CENVAT credit and credit of Additional Duty of Customs/Countervailing Duty was unavailable to VAT dealers unless registered as First/Second stage dealers. The tax not available as credit became part of the cost which adds to the price of goods/service. Ultimate burden of taxes not available as credit fell on the end consumer. Under GST, ITC will be available for tax paid at all the stages of supply paid in course or furtherance of business. ITC will flow uninterruptedly not only for intra-State transactions but also for

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GST · CGST · IGST SGST · SGST · IGST UTGST · UTGST · IGST 3. Conditions for claiming ITC ITC can be claimed by the registered person (RP) if all the following conditions are satisfied:- a. RP possesses tax invoice/debit note/other taxpaying document, issued by a registered supplier; b. Goods/services shall have been received by him. If goods are delivered on his direction [Bill to ship to scenario] to a third person it would be deemed to have been received by him. Where the goods are received in lots or installments, the registered taxable person shall be entitled to the credit upon receipt of the last lot or installment. c. The tax charged on supply has been actually paid to the government either in cash or through utilization of input tax credit; The recipient of supply to pay to the supplier the value of supply along with the tax within 180 days for date of invoice. If paid after 180 days than such ITC claimed along with interest will be add

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STR-9. 5. Restriction on claiming ITC ITC to the extent of taxes paid on goods and / or services used partly for the purpose of any business for other purposes shall be permitted to the extent of ITC attributable to purpose of business. ITC to the extent of taxes paid on goods and / or services is used for taxable supplies including zero rated supplies and partly for exempted [1] supplies shall be permitted only to the extent they are used in taxable supplies and zero-rated supplies only. Banking company or financial institution engaged in supply of service by way of accepting deposits, extending loans or advances may claim ITC in respect of taxes paid partly for taxable supply and partly for non taxable supplies in either of the following manner: a. to the extent attributable to taxable supplies; or b. 50% of eligible ITC on inputs, capital goods and input services in that month and the rest shall lapse. Such restriction not applicable to supplies made between RP having same PAN. The

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. Electronic Credit Ledger · No such concept · ECRL required to be maintained for crediting and utilizing ITC. Reversal of Credit · Reversal of ITC provided for in certain circumstances. · No such concept. Cases demanding reversal to be added to the output GST. Payment to Appropriate Government ·Credit claim and utilization not dependent upon payment of tax by the supplier. · ITC claim dependent upon payment of tax by the supplier. Failure to do so disentitles ITC claim to the recipient. 7. Negative list of ITC ITC on following items cannot be availed: a. motor vehicles, except when supplied in the usual course of business or are used for providing taxable services of – i. further supply of such vehicles or conveyances ; or ii. transportation of passengers; or iii. Imparting training on driving, flying, navigating such vehicles. b. Transportation of goods; c. Supply of goods or services or both of personal nature like – food and beverages, beau

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ructures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. f. Tax paid under Composition levy; g. Supply made by a non-resident taxable person except on goods imported by him; h. Supply of goods/service for personal consumption; i. Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; j. Any tax paid in accordance with the provisions of sections 74, 129 and 130 8. Matching of ITC: The matching, claim, reversal and reclaim of ITC a fool proof mechanism to tap revenue leakage in hands of the Government. Supplier to furnish details in GSTR-1 by 10th of the subsequent month. Details of the same to be communicated by GSTN to the recipient in GSTR-2A. On the basis of GSTR-2A the recipient shall verify, validate, modify, delete or include the details of inward supply in GSTR-2 by 15th of the next month. The details of the same to be communicated by GSTN in GSTR-1A to the supplier. On the basis of the self assessed return

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