Input tax credit (itc) under GST

R.C.M.

ITC under GST

Presented by - ARPIT VERMA

Covered In Chapter V of Revised Model GST Law Dated 25-11-2016 .

Came into force on the date as may be notified.

R.C.M.I.T.C.

CONTENTS

A. Overview- GST & ITC

B. Eligibility & Conditions to take Credit

C. Ineligible/ Blocked Input tax Credit

D. Proportionate credit of Input Tax

E. Input Credit in Special Circumstances

F. Recovery of ITC wrongly taken

G. Utilization of ITC for Payment

R.C.M.Overview- GST

oGST is a Value Added Tax.

oApplies on supplies of Goods / Services made for consideration.

Scheme of Taxation under GST

•CGST- levied & collected by Centre on intra state supplies

•SGST- levied & collected by States on Intra state supplies

•IGST- levied & collected by the Centre on Inter state supplies

I.T.C.

R.C.M.Overview- Input Tax Credit

•On Account of the provisions of ITC, GST is a Value Added Tax as Govt. will collect tax on each stage of supply after allowing the Credits for the Inputs.

•Input tax means tax charged on any supply of Goods or Services

•It includes tax paid under Reverse Charge

•It does not include tax charged under Composition Scheme.

I.T.C.

R.C.M.Eligible person to take Credit [sec. 16(1)]

•Every registered taxable person is eligible to take credit of input tax.

•Charged on any supply of goods/ services to him

•Which is used or intended to be used in the course or furtherance of his business

•The amount so charged shall be credited to electronic credit ledger of such person.

I.T.C.

R.C.M.Condition to take credit [sec. 16(2)]

•Registered taxable person is entitled to get ITC if-Having possession of taxpaying docs such as invoice &

debit note & others.Has received or deemed to received the goods and/or

services.Tax charged for such supply has been actually paid.Has furnished return as per sec.34.

•If goods received in lots/installments- receipt of last installment.

I.T.C.

R.C.M.Ineligible/ Blocked Input tax Credit

No ITC is allowed in respect of following:•Motor vehicles except when used for making taxable supplies:

Further supply of such vehiclesTransportation of goods/passengersImparting training or motor driving skills

•Supply of goods/ services, namely:Food & beverages, outdoor catering, beauty treatment, health

services, cosmetic and plastic surgery except for supply of the same category of goods/services

Membership of a club & fitness centreRent a cab, life insurance & health insuranceTravel benefits extended to employee on vacation such as

leave or home travel concession

I.T.C.


•Work contract services for construction of immovable property other than P&M (ITC allowed if further supply of WC Service).

•Goods & services received for Construction of IP other than P&M.

•Supplies on which tax has been paid under Composition Scheme.

•Supplies used for personal consumption

•Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.

•Any tax paid in relation to or after issuance of SCN

I.T.C.


•No ITC is allowable on the tax component of capital goods on which dep. has been claimed under Income tax.

•No ITC is allowed for any invoice/ debit note after furnishing return u/s 34 for September of next F/Y or furnishing of annual return, whichever is earlier.

•In case of service, if payment is not made to supplier within 3 months, then credit availed by the recipient shall be added to his output tax liability.

I.T.C.

R.C.M.Proportionate credit of Input Tax

2.Input Partly for Non-Business

1. . Credit of Input Tax in respect Pipelines & Telecommunication Tower

4.Optional Scheme for Banking

Co./F.I./NBFC

3.Input Partly for Exempt supply

1. Credit of Pipelines &

Telecommunication Tower

• Fixed to earth by foundation or structural support 1st year- 1/3rd of total input credit in the

year of receipt of goods 2nd year- 2/3rd of total input credit

including input avail on 1st year The balance of the amount of credit in

any subsequent F/Y.• The credit also includes input tax on

Foundation & Structural Support



2.Input used Partly for Business & Partly for Non-Business


Co./F.I./NBFC




• Goods and/or Services used for Business purpose- Credit Claimable

• Goods and/or Services used for Non-Business Purposes- Credit Non-Claimable



2.Input used Partly for Taxable Supplies & Partly for Exempted Supplies


Co./F.I./NBFC




• Goods and/or Services used for effective taxable supplies (Including Zero Rated Supplies) - Credit Claimable

• Goods and/or Services used for Exempted Supplies ( Including inputs/services used for supplies covered under reversed charge) - Credit Non-Claimable



4.Optional Scheme for Banking Company or Financial Institution or NBFC engaged in

accepting loans or advances


Co./F.I./NBFC




• 1st option - claim 50% of eligible input tax

or

2nd option- Claim credit of Eligible input on Goods and/or Services used for effective taxable supplies (Including Zero Rated Supplies) but excluding exempted supplies & RCM Supplies.

• Option not to be withdrawn during the financial year.

R.C.M.Input Credit in Special Circumstances

1. Credit of input held in stock and inputs contained in semi finished goods and Finished Goods if:

2. Transfer of Input Tax

3. Reversal of Input Tax

4. ITC in case of Job Worker

1.Credit of input held in stock and inputs contained in semi finished/Finished goods

A. Registration Granted within 30 Days

B. Opted Voluntary registrationC. Cease for

Composition SchemeD. Exempt supply becomes Taxable

Supply

• If person applied for registration within 30 Days from the date of liability to register & granted such registration.

• He is entitled to take credit of input held in stock and inputs contained in semi finished/Finished goods

• From the day immediately preceding the date from which he becomes liable to pay tax.

• If not applied within 30 days- no ITC.










Supply

• Person who obtains voluntary registration

• He is entitled to take credit of input held in stock and inputs contained in semi finished/Finished goods

• From the day immediately preceding the date of grant of registration.










Supply

• If person ceases to pay tax under composition scheme

• He is entitled to take credit of input held in stock and inputs contained in: semi finished/Finished goods on capital goods

• From the day immediately preceding the date from which he becomes liable to pay tax under regular scheme.










Supply

• Exempt supply of goods or services by a person becomes a taxable supply

• He is entitled to take credit of input held in stock and inputs contained in: Semi finished/Finished goods relatable to

such exempt supply Capital goods exclusively used for such

exempt supply

• From the day immediately preceding the date from which such supply becomes taxable.






2.Transfer of unutilized Input Tax




Supply

• Change in the constitution of a taxable person

• Due to sale, merger, demerger, amalgamation, lease or transfer of business.

• Such person is allowed to transfer Input tax unutilized in the books of accounts









Supply

3.Reversal of credit on Switching over

• Credit to be reversed on inputs held in stock, inputs contained in semi-finished /finished goods

• on switching over to composition scheme/ on goods becoming absolutely exempt.

• On the day immediately preceding the date of such switch over

• Balance credit to be lapsed.






4.ITC in respect of inputs send for Job Work




Supply

• The Principal can avail ITC on inputs & capital goods sent to job worker (as may be prescribed).

• Such transfer shall be deemed as sale to job worker if not returned back to principal/supplied directly to customer within a period of: 1 year in case of Inputs 3 years in case of capital goods

• From : The date of sending from business place of

principal The date of receipt in case directly sent to

Job worker

R.C.M.I.T.C.

Recovery of ITC wrongly taken

oWhen the credit has been taken wrongly

oThe same shall be recovered from the registered taxable person

oIn accordance with the provisions of the Act

R.C.M.I.T.C.

Utilization of ITC for Payment

I T C

CGST I GSTSGST

CGST IGST SGST IGST IGST CGST SGST

R.C.M.I.T.C.

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