Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 9-12-2017 Last Replied Date:- 22-5-2018 – In GST regime, the scope of definition of inputs, capital goods and input services is very wide and covers almost all the imaginable goods and services that are directly or indirectly used in course or furtherance of business. However, section 17(5) prescribes a list of goods or services on which ITC is not admissible. The opening para of section 17(5) of CGST Act, 2017 reads as follows:- (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- …… …… (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; The bare analysis of above section makes it clear that this section has overriding effect and it states that the ITC shall not be available in respect of goods lost, stolen, destroyed or written off. There is a s
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both the views, the authors of this update find that the definition of inputs and capital goods use the phrase used or intended to be used in course or furtherance of business . Since this condition is to be checked at the time of admissibility of ITC and at that time the goods lost, stolen or destroyed were intended to be used in course or furtherance of business, the ITC was legally availed. It is worthwhile to mention here that once ITC is legitimately availed, it cannot be demanded back without a specific provision in this regard. There is no provision for demanding the ITC on inputs, capital goods and input services that have already been used for manufacture of finished goods that are lost or stolen or damaged. There is only one provision under clause (h) of section 17(5) of CGST Act, 2017 which talks of reversal on inputs or capital goods or input services itself. Further, there is no such provision of reversal under rule 42 of CGST Rules, 2017. In absence of any specific provi
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educational purpose only and not intended for solicitation. You can reach us at www.capradeepjain.com, at our facebook page on https://www.facebook.com/GSTTODAYBYPRADEEPJAIN/ as well as follow us on Twitter at https://www.twitter.com/@capradeepjain21 – Reply By JAIPRAKASH RUIA – The Reply = Good !If a manufacturer buy gift and give to customer. whether the ITC of GST paid on gift purchased is available to manufacturer please? – Reply By Manoj Sharma – The Reply = Though the words used at the beginning of subsection 5 are no ITC shall be available I guess the real intention of Section 17(5)(h) is to define reversal. You do not know which goods you are going to distribute as gift or sample or which goods are gonna destroyed. The indirect meaning of this wording is that you take ITC at the arrival of goods but you have to reverse it when you distribute these inputs or inputs contained in finished goods as free gift or sample or when these goods are destroyed. – Articles – Knowledge Sharin
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