GST – Input Tax Credit – Draft Rules 31-3-2017
GST
Dated:- 2-4-2017
GST – Input Tax Credit – Draft Rules 31-3-2017
=============
Document 1
CHAPTER-
Input Tax Credit
1.
(1)
Documentary requirements and conditions for claiming input tax credit
The input tax credit shall be availed by a registered person, including the Input Service
Distributor, on the basis of any of the following documents, namely:-
(2)
(a)
(b)
(c)
(d)
(e)
(f)
an invoice issued by the supplier of goods or services or both in accordance with
the provisions of section 31;
a debit note issued by a supplier in accordance with the provisions of section 34;
a bill of entry;
an invoice issued in accordance with the provisions of clause (f) of sub-section (3)
of section 31;
a document issued by an Input Service Distributor in accordance with the
provisions of sub-rule (1) of rule invoice.7;
a document issued by an Input Service Distributor, as prescribed in clause (g) of
sub-rule (
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
d
of in FORM GSTR-2 for the month immediately following the period of one hundred and
eighty days from the date of issue of invoice.
(2) The amount of input tax credit referred to in sub-rule (1) shall be added to the output tax
liability of the registered person for the month in which the details are furnished.
(3) The registered person shall be liable to pay interest at the rate notified under sub-section (1)
of section 50 for the period starting from the date of availing credit on such supplies till the
date when the amount added to the output tax liability, as mentioned in sub-rule (2), is paid.
3. Claim of credit by a banking company or a financial institution
A banking company or a financial institution, including a non-banking financial company,
engaged in supply of services by way of accepting deposits or extending loans or advances that
chooses not to comply with the provisions of sub-section (2) of section 17, in accordance with
the option permitted under sub-sect
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
or shall distribute input tax credit in the manner and subject
to the conditions specified below-
(a) the input tax credit available for distribution in a month shall be distributed in
the same month and the details thereof shall be furnished in FORM GSTR-6 in
accordance with the provisions of Chapter – (Return Rules);
–
(b) the Input Service Distributor shall, in accordance with the provisions of clause
(d), separately distribute the amount in-eligible as input tax credit under the provisions
of sub-section (5) of section 17 and the amount eligible as input tax credit;
(c) the input tax credit on account of central tax, State tax, Union territory tax and
integrated tax shall be distributed separately in accordance with the provisions of clause
(d);
(d) the input tax credit that is required to be distributed in accordance with the
provisions of clause (d) and (e) of sub-section (2) of section 20 to one of the recipients
'Ri', whether registered or not, from amongst the to
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
in a State other than that of the Input Service
Distributor, be distributed as integrated tax and the amount to be so distributed
shall be equal to the aggregate of the amount of input tax credit of central tax and
State tax that qualifies for distribution to such recipient in accordance with clause
(d);
(g) The Input Service Distributor shall issue an ISD invoice, as prescribed in sub-rule (1)
of rule invoice-7, clearly indicating in such invoice that it is issued only for distribution
of input tax credit.
(h) The Input Service Distributor shall issue an ISD credit note, as prescribed in sub-rule
(1) of rule Invoice-7, for reduction of credit in case the input tax credit already distributed
gets reduced for any reason.
(i) Any additional amount of input tax credit on account of issuance of a debit note to an
Input Service Distributor by the supplier shall be distributed in the manner and subject to
the conditions specified in clauses (a) to (g) and the amount attributable
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
other reason for any of the recipients, including that it was distributed to a
wrong recipient by the Input Service Distributor, the process prescribed in clause (j) of
sub-rule (1) shall, mutatis mutandis apply for reduction of credit.
(3) Subject to sub-rule (2), the Input Service Distributor shall, on the basis of the ISD credit
note specified in clause (h) of sub-rule (1), issue an ISD Invoice to the recipient entitled to such
credit and include the ISD credit note and the ISD Invoice in the return in FORM GSTR-6 for
the month in which such credit note and invoice was issued.
5.
Manner of claiming credit in special circumstances
(1) Input tax credit claimed in accordance with the provisions of sub-section (1) of section 18
on the inputs lying in stock or inputs contained in semi-finished or finished goods lying in
stock, or the credit claimed on capital goods in accordance with the provisions of clauses (c)
and (d) of the said sub-section, shall be subject to the follo
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e becomes liable to pay
tax under the provisions of this Act, in the case of a claim under clause (a) of sub-
section (1) of Section 18,
on the day immediately preceding the date of grant of registration, in the case of a
claim under clause (b) of sub-section (1) of Section 18,
on the day immediately preceding the date from which he becomes liable to pay
tax under section 9, in the case of a claim under clause (c) of sub-section (1) of
Section 18,
on the day immediately preceding the date from which supplies made by the
registered person becomes taxable, in the case of a claim under clause (d) of sub-
section (1) of Section 18.
(d) The details furnished in the declaration under clause (c) shall be duly certified by a
practicing chartered account or cost accountant if the aggregate value of claim on account
of central tax, State tax and integrated tax exceeds two lakh rupees.
(e) The input tax credit claimed in accordance with clauses (c) and (d) of sub-section (1) of
sec
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rger, de-merger, amalgamation, lease or
transfer of business has been done with a specific provision for transfer of liabilities.
(3) The transferee shall, on the Common Portal, accept the details so furnished by the transferor
and, upon such acceptance, the un-utilized credit specified in FORM GST ITC-02 shall be
credited to his electronic credit ledger.
4
(4) The inputs and capital goods so transferred shall be duly accounted for by the transferee in
his books of account.
7. Manner of determination of input tax credit in certain cases and reversal thereof
(1) The input tax credit in respect of inputs or input services, which attract the provisions of
sub-sections (1) or (2) of section 17, being partly used for the purposes of business and partly
for other purposes, or partly used for effecting taxable supplies including zero rated supplies
and partly for effecting exempted supplies, shall be attributed to the purposes of business or for
effecting taxable supplies in the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
'T4';
(g) ‘Tâ‚', 'Tâ‚‚', 'T3' and ‘T4' shall be determined and declared by the registered person at the
invoice level in FORM GSTR-2;
(h) Input tax credit left after attribution of input tax credit under clause (g) shall be called
common credit, be denoted as ‘C2' and calculated as:
C2=C1- T4;
(i) The amount of input tax credit attributable towards exempt supplies, be denoted as ‘Dâ‚' and
calculated as:
where,
D1= (E÷F) × C2
'E' is the aggregate value of exempt supplies, that is, all supplies other than taxable and zero
rated supplies, during the tax period, and
'F' is the total turnover of the registered person during the tax period:
Provided that where the registered person does not have any turnover during the said tax period
or the aforesaid information is not available, the value of ‘E/F' shall calculated by taking values
of 'E' and 'F' of the last tax period for which details of such turnover are available, previ
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
qual to ‘Dâ‚' and 'D2' shall be added to the output tax liability of the registered
person:
Provided that if the amount of input tax relating to inputs or input services which have been
used partly for purposes other than business and partly for effecting exempt supplies has been
identified and segregated at invoice level by the registered person, the same shall be included
in ‘Tâ‚ and ‘Tâ‚‚' respectively, and the remaining amount of credit on such input or input services
shall be included in 'T4'.
(2) The input tax credit determined under sub-rule (1) shall be calculated finally for the
financial year before the due date for filing the return for the month of September following
the end of the financial year to which such credit relates, in the manner prescribed in the said
sub-rule and,
(a) where the aggregate of the amounts calculated finally in respect of ‘Dâ‚' and 'D2' exceeds
the aggregate of the amounts determined under sub
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
certain cases
(1) Subject to the provisions of sub-section (3) of section 16, the input tax credit in respect of
capital goods, which attract the provisions of sub-sections (1) and (2) of section 17, being partly
used for the purposes of business and partly for other purposes, or partly used for effecting
taxable supplies including zero rated supplies and partly for effecting exempt supplies, shall be
attributed to the purposes of business or for effecting taxable supplies in the following manner,
namely,-
(a) the amount of input tax in respect of capital goods used or intended to be used
exclusively for non-business purposes or used or intended to be used exclusively for
effecting exempt supplies shall be indicated in FORM GSTR-2 and shall not be credited
to his electronic credit ledger;
(b) the amount of input tax in respect of capital goods used or intended to be used
exclusively for effecting taxable supplies including zero-rated supplies shall be indicated
in FORM GST
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
he rate
of five percentage points for every quarter or part thereof shall be added to the aggregate
value 'T.';
(e) the amount of input tax credit attributable to a tax period on common capital goods
during their residual life, be denoted as 'Tm' and calculated as:-
Tm= Te÷60
(f) the amount of input tax credit, at the beginning of a tax period, on all common
capital goods whose residual life remains during the tax period, be denoted as 'Tr'
and shall be the aggregate of ‘Tm' for all such capital goods.
(g) the amount of common credit attributable towards exempted supplies, be denoted
as 'Te', and calculated as:
Te= (E÷F) x Tr
where,
'E' is the aggregate value of exempt supplies, that is, all supplies other than taxable and zero
rated supplies, during the tax period, and
'F' is the total turnover of the registered person during the tax period:
7
Provided that where the registered person does not have any turnover during the said tax period
or the aforesaid
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
contained in semi-
finished and finished goods lying in stock, and capital goods lying in stock, for the purposes of
sub-section (4) of section 18 or sub-section (5) of 29, shall be determined in the following
manner namely,-
(a) For inputs lying in stock, and inputs contained in semi-finished and finished goods
lying in stock, the input tax credit shall be calculated proportionately on the basis of
corresponding invoices on which credit had been availed by the registered taxable
person on such input.
(b) For capital goods lying in stock the input tax credit involved in the remaining residual
life in months shall be computed on pro-rata basis, taking the residual life as five years;
Illustration
Capital goods have been in use for 4 years, 6 month and 15 days.
The residual remaining life in months = 5 months ignoring a part of the month
Input tax credit taken on such capital goods=Ç
Input tax credit attributable to remaining residual life=C multiplied by 5/60
(2) The
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
allan
issued by the principal, including where the inputs or capital goods are sent directly to job-
worker.
(2)
The challan issued by the principal to the job worker shall contain the details specified
in rule Invoice.8:
(3) The details of challans in respect of goods dispatched to a job worker or received from a
job worker during a tax period shall be included in FORM GSTR-1 furnished for that period.
(4) If the inputs or capital goods are not returned to the principal within the time stipulated in
section 143, the challan issued under sub-rule (1) shall be deemed to be an invoice for the
purposes of this Act.
Explanation.- For the purposes of this Chapter,-
(1) “capital goods” shall include “plant and machinery” as defined in the Explanation to section
17;
(2) for determining the value of an exempt supply as referred to in sub-section (3) of section
17:-
(a) the value of land and building shall be taken as the same as adopted for the purpose of
paying st
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =