TAX CREDIT ON INPUTS USED FOR MANUFACTURING /GENERATION /PRODUCTION /CREATION OF TAX FREE SUPPLIES OR NON-GST SUPPLIES
Para 2 (G)
Bill
Business Processes for GST on Refund Process
Report on – Business Processes for GST on Refund Process – [August 2015]
2 (G) TAX CREDIT ON INPUTS USED FOR MANUFACTURING /GENERATION /PRODUCTION /CREATION OF TAX FREE SUPPLIES OR NON-GST SUPPLIES:
i) There would be certain goods or services which may be either exempted or NIL rated in GST regime. Further there may be certain goods or services which may not be brought under GST regime. Persons supplying such exempted/nil rated/non-GST goods or services would be receiving goods or services as their input supplies after payment of GST.
ii) The i
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the refund is allowed to them, which is not intended by tax design.
v) It is recommended that the model GST Law may provide that the suppliers of exempted / NIL rated / non GST goods or services would not be entitled to the ITC of GST paid on inputs (including input services or capital goods) received by them and consequently for refund of GST paid by them. In case of mixed supplies, ITC may be allowed proportionately.
vi) The tax credit on the inputs used for supply of exempted/ NIL rated / non GST goods or services should be treated as “ineligible input tax credit” and there should be an appropriate provision in the return to provide the related invoice details.
vii) In addition to ineligible input tax credit arising from inputs used f
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