{"id":4099,"date":"2020-03-25T16:28:23","date_gmt":"2020-03-25T16:28:23","guid":{"rendered":"https:\/\/commerceiets.com\/?p=4099"},"modified":"2020-03-25T16:28:23","modified_gmt":"2020-03-25T16:28:23","slug":"input-tax-credit-under-gst","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/input-tax-credit-under-gst\/","title":{"rendered":"INPUT TAX CREDIT UNDER GST PDF"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/input-tax-credit-under-gst\/#INPUT_TAX_CREDIT_UNDER_GST\" title=\"INPUT TAX CREDIT UNDER GST\">INPUT TAX CREDIT UNDER GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/input-tax-credit-under-gst\/#PROVISIONS_REGARDING_INPUT_TAX_CREDIT\" title=\"PROVISIONS\nREGARDING INPUT TAX CREDIT\">PROVISIONS\nREGARDING INPUT TAX CREDIT<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"INPUT_TAX_CREDIT_UNDER_GST\"><\/span><strong>INPUT TAX CREDIT UNDER GST<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Input tax credit under <a href=\"https:\/\/commerceiets.com\/gst\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"GST (opens in a new tab)\">GST<\/a>&nbsp;means at the time of paying tax on output, the tax already paid on inputs can be reduced and only the balance amount a person is liable to pay.<\/p>\n\n\n\n<p>When you buy a product\/service from a\nregistered dealer you pay taxes on the purchase. On selling, you collect the\ntax. You adjust the taxes paid at the time of purchase with the amount of\noutput tax (tax on sales) and balance liability of tax (tax on sales&nbsp;<em>minus<\/em>&nbsp;tax\non purchase) has to be paid to the government. This mechanism is called\nutilization of input tax credit.<\/p>\n\n\n\n<p><strong>EXAMPLE:<\/strong> Suppose you are a\nmanufacturer:&nbsp;<\/p>\n\n\n\n<p>a. Tax payable on output (FINAL PRODUCT)\nis Rs 450&nbsp;<\/p>\n\n\n\n<p>b. Tax paid on input (PURCHASES) is Rs 300. <\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"676\" height=\"338\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-77.png\" alt=\"\" class=\"wp-image-4101\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-77.png 676w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-77-300x150.png 300w\" sizes=\"(max-width: 676px) 100vw, 676px\" \/><\/figure>\n\n\n\n<p>You can claim INPUT CREDIT of Rs 300 and\nyou only need to deposit Rs 150 in taxes.<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\"><span class=\"ez-toc-section\" id=\"PROVISIONS_REGARDING_INPUT_TAX_CREDIT\"><\/span><strong>PROVISIONS\nREGARDING INPUT TAX CREDIT<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The following are the various provisions regarding the Input Tax Credit:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"581\" height=\"530\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-78.png\" alt=\"\" class=\"wp-image-4102\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-78.png 581w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-78-300x274.png 300w\" sizes=\"(max-width: 581px) 100vw, 581px\" \/><\/figure>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>WHO\nCAN CLAIM ITC?<\/strong><\/p>\n\n\n\n<p>ITC can be claimed by a person registered under\nGST only if he fulfills all the&nbsp;conditions&nbsp;as prescribed:<\/p>\n\n\n\n<p>a. The dealer should be in possession of tax\ninvoice.<\/p>\n\n\n\n<p>b. The said goods\/services have been received.<\/p>\n\n\n\n<p>c. Returns have been filed.<\/p>\n\n\n\n<p>d. The tax charged has been paid to the\ngovernment by the supplier.<\/p>\n\n\n\n<p>e. When goods are received in installments\nITC can be claimed only when the last lot is received.<\/p>\n\n\n\n<p>f. No ITC will be allowed if depreciation has\nbeen claimed on tax component of a capital good.<\/p>\n\n\n\n<p>A person registered under composition scheme\nin GST cannot claim ITC.<\/p>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>WHAT\nCAN BE CLAIMED AS ITC?<\/strong><\/p>\n\n\n\n<p>ITC can be&nbsp;claimed only\nfor business purposes<strong>.&nbsp;<\/strong>ITC will not be available for goods or services exclusively used\nfor:&nbsp;<\/p>\n\n\n\n<p>a. Personal use&nbsp;<\/p>\n\n\n\n<p>b. Exempt supplies&nbsp;<\/p>\n\n\n\n<p>c. Supplies for which ITC is\nspecifically not available.<\/p>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>WHAT\nIS THE TIME LIMIT TO AVAIL GST ITC?<\/strong><\/p>\n\n\n\n<p>ITC\ncan be availed by a registered taxable person in a specific manner and within a\nspecified time frame. The table below shows the different situations wherein\nthe inputs can be claimed for semi-finished goods or stock or finished goods.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>\n  <strong>SITUATION<\/strong>\n  <\/td><td>\n  <strong>ITC CLAIMS DAY FOR SEMI-FURNISHED GOODS\/STOCK\/FINISHED\n  GOODS (HELD ON IMMEDIATE PRECEDING DAY)<\/strong>\n  <\/td><\/tr><tr><td>\n  If a person has applied for registration or is liable\n  to register or is granted registration\n  <\/td><td>\n  Day from when he is liable to pay taxes\n  <\/td><\/tr><tr><td>\n  When a person takes voluntary registration\n  <\/td><td>\n  Registration day\n  <\/td><\/tr><tr><td>\n  When a taxable registered person stops paying taxes in\n  composition levy scheme\n  <\/td><td>\n  Day from when he is liable to pay tax normally u\/s 7.\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>&nbsp;Input\ntax credit for the above-mentioned situations can be claimed only if it does\nnot exceed one year from the tax invoice date of issue related to supply.<\/p>\n\n\n\n<p>For\nany other cases, ITC must be claimed&nbsp;earlier of the following-<\/p>\n\n\n\n<ul><li>Furnishing of annual return or<\/li><li>Due date of filing the monthly return\n(GSTR-3) for the next financial year\u2019s September month.<\/li><\/ul>\n\n\n\n<p><strong>Example-<\/strong>&nbsp;For the\ninvoice dated 10<sup>th<\/sup> September 2018, ITC must be availed earlier of\nthe following dates \u2013<br \/>\nThe due date for September 2018 return \u2013 20th October 2018<br \/>\nAnnual return filed (assumed) \u2013 10th November 2018<br \/>\nThus till 20th October 2018, ITC must be availed.<\/p>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>HOW TO CLAIM ITC?<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"615\" height=\"298\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-79.png\" alt=\"\" class=\"wp-image-4103\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-79.png 615w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-79-300x145.png 300w\" sizes=\"(max-width: 615px) 100vw, 615px\" \/><\/figure>\n\n\n\n<p>All regular taxpayers must report the\namount of input tax credit (ITC) in their monthly GST returns of Form GSTR-3B.\nThe following table requires the summary figure of eligible ITC, Ineligible ITC\nand ITC reversed during the tax period. The format of the table is given below:<\/p>\n\n\n\n<p>The\nfollowing conditions have to be met to be entitled to Input Tax Credit under\nthe GST scheme:<\/p>\n\n\n\n<ol><li>One\nmust be a registered taxable person.<\/li><li>One\ncan claim Input Tax Credit only if the goods and services received is used for\nbusiness purposes.<\/li><li>Input\nTax Credit can be claimed on exports\/zero-rated supplies and are taxable.<\/li><li>For a\nregistered taxable person, if the constitution changes due to merger, sale or\ntransfer of business, then the Input Tax Credit which is unused shall be\ntransferred to the merged, sold or transferred business.<\/li><li>One\ncan credit the Input Tax Credit in his Electronic Credit Ledger in a\nprovisional manner on the common portal as prescribed in GST law.<\/li><li>Supporting\ndocuments \u2013 debit note, tax invoice, supplementary invoice, are needed to claim\nthe Input Tax Credit.<\/li><li>If\nthere is an actual receipt of goods and services, an Input Tax Credit can be\nclaimed.<\/li><li>The\nInput Tax should be paid through Electronic Credit\/Cash ledger.<\/li><li>All\nGST returns such as GST-1, 2,3, 6, and 7 needs to be filed.<\/li><\/ol>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>HOW\nINPUT TAX WORKS UNDER GST?<\/strong><\/p>\n\n\n\n<p>Suppose\nMr. A is a seller. He sells goods to Mr. B. The buyer Mr. B is now eligible to\nclaim the purchase credit using his purchase invoices.<\/p>\n\n\n\n<p>This\nis how it works:<\/p>\n\n\n\n<ul><li>A uploads all his tax invoices details as issued in GSTR-1.<\/li><li>The details uploaded by Mr. A is automatically populated or reflected in GSTR-2A. This same data will get reflected when Mr. B files the GSTR-2 returns which are nothing but the details of his purchase.<\/li><li>The details of the sale are then accepted and acknowledged for by Mr. B, and subsequently, the purchase tax is credited to Mr. B\u2019s \u2018Electronic Credit\u2019. He can use this to adjust it later for future output tax liability and receive a refund.<\/li><\/ul>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>HOW\nTO UTILIZE THE INPUT TAX CREDIT?<\/strong><\/p>\n\n\n\n<p>In GST there are four types of taxes: CGST,\nIGST, and SGST and UTGST.<br \/>\nFor the inter-state supply of goods\/ services, IGST is charged and for the\nintra-state supply of goods\/services CGST and SGST\/UTGST are charged.<\/p>\n\n\n\n<p>While\nmaking payment for the above taxes, input tax credit will be allowed in the\nfollowing manner-<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>\n  <strong>Credit<\/strong>\n  <\/td><td>\n  <strong>1st to be utilized for payment of<\/strong>\n  <\/td><td>\n  <strong>Balance if any<\/strong>\n  <\/td><\/tr><tr><td>\n  CGST\n  <\/td><td>\n  CGST\n  <\/td><td>\n  IGST\n  <\/td><\/tr><tr><td>\n  IGST\n  <\/td><td>\n  IGST\n  <\/td><td>\n  CGST and then SGST\/UTGST\n  <\/td><\/tr><tr><td>\n  SGST\/UTGST\n  <\/td><td>\n  SGST\/UTGST\n  <\/td><td>\n  &nbsp;IGST\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>REVERSAL\nOF INPUT TAX CREDIT<\/strong><\/p>\n\n\n\n<p>ITC can be availed only on goods and services\nfor business purposes. If they are used for non-business (personal) purposes,\nor for making exempt supplies ITC cannot be claimed. Apart from these, there\nare certain other situations where ITC will be reversed.<\/p>\n\n\n\n<p><strong>ITC will be reversed in the following cases-<\/strong><\/p>\n\n\n\n<ul><li><strong>Non-payment of invoices in 180 days<\/strong>: ITC\nwill be reversed for invoices which were not paid within 180 days of issue.<\/li><li><strong>Credit note issued to ISD by seller<\/strong>:\nThis is for ISD. If a credit note was issued by the seller to the HO then the\nITC subsequently reduced will be reversed.<\/li><li><strong>Inputs partly for business purpose and partly\nfor exempted supplies or for personal use:<\/strong> This is for\nbusinesses which use inputs for both business and non-business (personal)\npurpose. ITC used in the&nbsp;portion of input goods\/services used for the\npersonal purpose must be&nbsp;reversed proportionately.<\/li><li><strong>Capital goods partly for business and partly\nfor exempted supplies or for personal use:<\/strong>&nbsp;This is\nsimilar to above except that it concerns capital goods.<\/li><li><strong>ITC reversed is less than required:<\/strong>&nbsp;This\nis calculated after the annual return is furnished. If total ITC on inputs of\nexempted\/non-business purpose is more than the ITC actually reversed during the\nyear then the difference amount will be added to output liability. Interest\nwill be applicable.<\/li><\/ul>\n\n\n\n<p>The details of&nbsp;reversal of ITC&nbsp;will be furnished in&nbsp;<strong>GSTR-3B.&nbsp;<\/strong><\/p>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>RECONCILIATION\nOF ITC<\/strong><\/p>\n\n\n\n<p>ITC claimed by the person has to match with the details specified by his supplier in his GST return. In case of any&nbsp;mismatch, the supplier and recipient would be communicated regarding discrepancies after the filling of GSTR-3B.&nbsp;<\/p>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>DOCUMENTS\nREQUIRED FOR CLAIMING ITC<\/strong><\/p>\n\n\n\n<p>The following&nbsp;documents\nare required for claiming ITC: <\/p>\n\n\n\n<ul><li>Supplier\nissued invoice for supplying the services and goods or both according to GST\nlaw.<\/li><\/ul>\n\n\n\n<ul><li>A debit note issued by the supplier to the recipient in case of tax payable or taxable value as      specified in the invoice is less than the tax payable or taxable value on such supplies.<\/li><li>Bill of entry.<\/li><li>A credit note or invoice which is to be issued by the ISD (Input Service Distributor) according to the GST invoice rules.<\/li><li>An invoice issued like the bill of supply under certain situations instead of the tax invoice. If the      amount is lesser than INR 200 or in conditions where the reverse charges are applicable according to the GST law.<\/li><li>A supplier issued a bill of supply for goods and services or both as per the GST invoice rules.<\/li><\/ul>\n\n\n\n<p>The above documents prepared as per the GST invoice rules\nshould be furnished while filing the GSTR-2 form. Failure to present these\nforms can lead to either rejection or resubmission of the request.<\/p>\n\n\n\n<p>For taxes paid on goods and services or both due to any\nfraud or due to order for the demand raised, suppression of facts or willful\nmisstatement, Input Tax Credit cannot be claimed.<\/p>\n\n\n\n<p>Since input credit will be available to the seller at\neach stage, the input tax credit is expected to bring down the overall taxes\ncharged on the product at present. So, if input credit mechanism works\nefficiently, final consumers may see the cost reduction.<\/p>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>SPECIAL CASES OF ITC<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"639\" height=\"219\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-80.png\" alt=\"\" class=\"wp-image-4104\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-80.png 639w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-80-300x103.png 300w\" sizes=\"(max-width: 639px) 100vw, 639px\" \/><\/figure>\n\n\n\n<p><strong><em>ITC for Capital Goods<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>ITC\nis available for capital goods&nbsp;under GST.<\/p>\n\n\n\n<p>However, ITC is not available for: <\/p>\n\n\n\n<ul><li>Capital Goods used\nexclusively for making exempted goods <\/li><li>Capital Goods used\nexclusively for non-business (personal) purposes&nbsp;<\/li><\/ul>\n\n\n\n<p>No\nITC will be allowed if depreciation has been claimed on tax component of\ncapital goods.<\/p>\n\n\n\n<p><strong><em>ITC on Job Work<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>A principal manufacturer may send goods for\nfurther processing to a job worker. For example, a shoe manufacturing company\nsends half-made shoes (upper part) to job workers who will fit the soles. In\nsuch a situation the principal manufacturer will be allowed to take credit of\ntax paid on the purchase of such goods sent on job work.<\/p>\n\n\n\n<p>ITC will be allowed when goods are sent to job worker&nbsp;in both the cases:<\/p>\n\n\n\n<ul><li>From principal\u2019s place of business<\/li><li>Directly from the place of supply of the\n     supplier of such goods<\/li><\/ul>\n\n\n\n<p>However, to enjoy ITC, the goods sent must be\nreceived back by the principal within 1 year and 3 years in case of capital\ngoods.<\/p>\n\n\n\n<p><strong><em>ITC Provided by Input Service Distributor\n(ISD)<\/em><\/strong><strong><em><\/em><\/strong><\/p>\n\n\n\n<p>An&nbsp;input service distributor&nbsp;(ISD)\ncan be the head office (mostly) or a branch office or registered office of the\nregistered person under GST. ISD collects the input tax credit&nbsp;on all the\npurchases made and&nbsp;distribute&nbsp;it to all the recipients (branches)\nunder different heads like CGST, SGST\/UTGST, IGST or cess.<\/p>\n\n\n\n<p><strong><em>ITC on Transfer of Business<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>This applies in cases of&nbsp;amalgamations\/mergers\/transfer&nbsp;of\nbusiness. The transferor will have available ITC which will be passed to the\ntransferee at the time of transfer of business<strong>.<\/strong><\/p>\n\n\n\n<p class=\"has-green-background-color has-background\"><strong>OTHER PROVISIONS REGARDING ITC<\/strong><\/p>\n\n\n\n<ol><li>For&nbsp;advance payment, the supplier is\nrequired to pay tax on such advance receipt but in case of the recipient, he\ncan avail the ITC only when tax invoice is issued and goods\/services are\nreceived.<\/li><li>ITC cannot be availed on the basis of a\nphotocopy of the valid document.<\/li><li>SGST paid in one state cannot be utilized as\ncredit for payment of SGST of another state.<\/li><li>For payment of interest\nand&nbsp;penalty&nbsp;Input tax credit cannot be utilized in other words it\nshould be paid using electronic cash ledger.<\/li><li>For claiming&nbsp;ITC goods\/ services must be\nactually received. Hence the goods or services received by the agent or the job\nworker will be assumed to be received by the recipient.<\/li><li>On receipt of invoice by the recipient,\ninvoice amount must be paid within 180 days from the date of invoice. If the\nrecipient fails to pay so, the amount taken as credit will be reversed and\noutput tax will be payable on such amount. Yet on the later date, if the\nrecipient pays the invoice amount, he can again claim the credit.<\/li><li>On filing the form GSTR-2 (inward supplies\ndetails) by the recipient, the credit claimed in the return will be credited to\nelectronic credit ledger on the provisional basis. The recipient can file Form\nGSTR-3 and pay self-assessed tax by taking credit of input available in electronic\ncredit ledger. After filling of form GSTR-3 by both supplier and recipient\nsystem carries out the matching process. If the supplier has paid the tax on\nthe goods\/services, ITC will be allowed to the recipient. In case during the\nmatching process, any mismatch is found due to-<br \/>\na) duplication of claim or<br \/>\nb) If the input claimed by the recipient is in excess of output declared by the\nsupplier,<br \/>\nthen, the excess amount will be added to the output tax liability of the\nrecipient and the tax amount will be required to be paid along with the\ninterest.<\/li><li>In case if goods (inputs and Capital goods\nboth) has been received in installment or lot against a single invoice then\ninput can be availed on the receipt of last installment or lot.<\/li><li>GST paid under reverse charge can also be\nutilized as ITC.<\/li><li>If goods or services purchased\/received are\nused for both business and non-business purpose, then only part of ITC relating\nto goods\/service used for business purpose will be allowed as a credit.Even in\ncase of taxable and exempted goods\/services, only the part relating to taxable\ngoods\/service will be allowed as a credit.<\/li><\/ol>\n\n\n\n<p class=\"has-green-background-color has-background\">&nbsp;<strong>CASES WHEN ITC IS NOT AVAILABLE UNDER GST<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"648\" height=\"437\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-81.png\" alt=\"\" class=\"wp-image-4105\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-81.png 648w, https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/image-81-300x202.png 300w\" sizes=\"(max-width: 648px) 100vw, 648px\" \/><\/figure>\n\n\n\n<p><strong><em>MOTOR VEHICLES &amp; CONVEYANCES<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>ITC is not available for Motor vehicles used to transport\npersons, having a seating capacity of less than or equal to 13 persons\n(including the driver).<\/p>\n\n\n\n<p>Further, ITC is not available on vessels and aircraft.<\/p>\n\n\n\n<p>For example, XYZ &amp; Co. buys a car for their business.\nThey cannot claim ITC on the same.<\/p>\n\n\n\n<p><strong>Exceptions to ITC on motor vehicles\/vessels\/aircrafts<\/strong><\/p>\n\n\n\n<p>ITC will be available when the vehicle is used for making\ntaxable supplies by the following.<\/p>\n\n\n\n<p><strong>a) Supply of other vehicles or conveyances, vessels or\naircrafts.<\/strong><\/p>\n\n\n\n<p>In the business of supplying cars, ITC will be available.<\/p>\n\n\n\n<p>For example, a car dealer purchases a car for Rs.50 lakh\nplus 14 lakh GST (ignoring cess calculations). The same car was later sold for\n70 lakhs along with Rs.19.60 lakh GST.&nbsp;Since he is a dealer, he can claim\nITC of 14 lakhs and pay only Rs.5.60 lakh (19.60 \u2013 14).<\/p>\n\n\n\n<p><strong>b) Transportation of passengers<\/strong><\/p>\n\n\n\n<p>If you are providing transportation of passengers then\nITC will be allowed on the vehicle purchased.<\/p>\n\n\n\n<p>For example, Happy Tours purchased a bus for inter-city\ntransport of passengers. ITC is available.<\/p>\n\n\n\n<p><strong>c) Imparting training on driving, flying, navigating such\nvehicle or conveyances or vessels or aircrafts, respectively.<\/strong><\/p>\n\n\n\n<p>A driving school purchases a car to give training to\nstudents. The school can claim ITC on the GST paid on the car.<\/p>\n\n\n\n<p><strong>d) Transportation of goods<\/strong><\/p>\n\n\n\n<p>ITC will be allowed on motor vehicles (and other\nconveyances) used to transport goods from one place to another. However, this\nis concerning other transporters and not&nbsp;goods transport agencies (GTA).<\/p>\n\n\n\n<p><strong><em>FOOD, BEVERAGES, CLUB MEMBERSHIPS AND OTHERS<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>ITC is not for the supply of following goods or services\nor both:<\/p>\n\n\n\n<ul><li>Food and beverages<\/li><li>Outdoor catering<\/li><li>Beauty treatment<\/li><li>Health services<\/li><li>Cosmetic and plastic surgery<\/li><\/ul>\n\n\n\n<p>However, ITC will be available\nif the category of&nbsp;inward and outward supply is same or the component\nbelongs to a mixed or composite supply under GST.<\/p>\n\n\n\n<p>Example: Ajay Enterprises arranges for an office party\nfor its employees. Ajay Enterprises will not be able to claim ITC on the food\n&amp; beverages served.<\/p>\n\n\n\n<p><strong><em>SERVICES OF GENERAL INSURANCE, SERVICING,\nREPAIR AND MAINTENANCE<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>No ITC is allowed on services of general insurance,\nservicing, repair and maintenance in so far as they relate to motor vehicles,\nvessels or aircraft referred to in (1).<\/p>\n\n\n\n<p><strong>Exceptions to ITC on insurance, repair or maintenance<\/strong><\/p>\n\n\n\n<ul><li>Same as expections mentioned for motor vehicles\/vessels\/aircrafts<\/li><li>Where received by a taxable person engaged\u2014<\/li><\/ul>\n\n\n\n<p>(I) In the\nmanufacture of such motor vehicles, vessels or aircraft; or<\/p>\n\n\n\n<p>(II) In the\nsupply of general insurance services in respect of such motor vehicles, vessels\nor aircraft insured by him<\/p>\n\n\n\n<p><strong><em>SALE OF MEMBERSHIP IN A CLUB, HEALTH, FITNESS\nCENTRE<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>No ITC will be allowed on any membership fees for gyms,\nclubs etc.<\/p>\n\n\n\n<p>Example: X, a Managing Director has taken membership of a\nclub and the company pays the membership fees. &nbsp;ITC will not be available\nto the company or Mr. X.<\/p>\n\n\n\n<p><strong><em>RENT-A-CAB, LIFE INSURANCE, HEALTH INSURANCE<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>ITC is not available for\nrent-a-cab, health insurance and life insurance.<\/p>\n\n\n\n<p>However, the following are <strong>exceptions<\/strong>, i.e., ITC is available for-<\/p>\n\n\n\n<ul><li>Any services which are made obligatory for an\nemployer to provide its employee by the Indian Government under any current law\nin force<\/li><\/ul>\n\n\n\n<p>For example,&nbsp;assuming the government passes a rule\nfor all employers to provide mandatory cab services to female staff in night\nshifts. ABC Ltd. hires a rent-a-cab to provide to transportation to its female\nstaff on night shifts. Then ITC will be available to ABC Ltd. on the GST paid\nto the rent-a-cab service.<\/p>\n\n\n\n<ul><li>If the category is same for the inward supply\nand outward supply or it is a part of the mixed or composite supply<\/li><\/ul>\n\n\n\n<p>For example, ABC Travels lends out a car to XYZ Travels.\nThen XYZ Travels can claim ITC on the same.<\/p>\n\n\n\n<ul><li>Leasing, renting or hiring of motor vehicles,\nvessels or aircraft with exceptions same as those mentioned for (1).<\/li><\/ul>\n\n\n\n<p><strong><em>TRAVEL<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>ITC is not available in the case of travel, benefits\nextended to employees on vacation such as leave or home travel concession.<\/p>\n\n\n\n<p>For example,<\/p>\n\n\n\n<p>ABC Ltd. offers a travel package to its employees for\npersonal holidays. ITC on GST paid by ABC Ltd. for the holiday package will not\nbe allowed.<\/p>\n\n\n\n<p>ITC will be allowed for travel for business purposes. <\/p>\n\n\n\n<p><strong><em>WORKS CONTRACT<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>ITC shall not be available for any work contract\nservices.&nbsp;ITC for the construction of an immovable property cannot be\navailed, except where the input service is used for further work contract\nservices.<\/p>\n\n\n\n<p>For example, XYZ Contractors are constructing an immovable property. They cannot claim any ITC on the works contract. However, XYZ hires ABC Contractors for a portion of the works contract. XYZ can claim ITC on the GST charged by ABC Contractors.<\/p>\n\n\n\n<p><strong><em>CONSTRUCTING AN IMMOVABLE PROPERTY ON OWN\nACCOUNT<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>No ITC is available for goods\/services for construction of\nan immovable property on his own account. Even if such goods\/services are used\nin the course or furtherance of business, ITC will not be available.<\/p>\n\n\n\n<p><em>But this rule does not apply to plant or machinery. ITC\nis available on inputs used to manufacture plant and machinery for own use.<\/em><\/p>\n\n\n\n<p>Example-<\/p>\n\n\n\n<ul><li>Ajay Steel Industries constructs an office building for its headquarters. ITC will not be available.<\/li><li>Ajay Steel Industries also constructs a blast furnace to manufacture steel. ITC is available since it is a plant.<\/li><\/ul>\n\n\n\n<p><strong><em>COMPOSITION SCHEME<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>No ITC would be available to the person who has made the payment of tax under composition scheme in GST law.<\/p>\n\n\n\n<p><strong><em>NO ITC FOR NON-RESIDENTS<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>ITC cannot be availed on goods\/services received by a non-resident taxable person. ITC is only available on any goods imported by him.<\/p>\n\n\n\n<p><strong><em>NO ITC FOR PERSONAL USE<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>No ITC will be available for the goods\/ services used for&nbsp;personal purposed and not for business purposes.<\/p>\n\n\n\n<p><strong><em>FREE SAMPLES AND DESTROYED GOODS<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>No ITC is available for goods lost, stolen, destroyed,\nwritten off or given off as gift or free samples.<\/p>\n\n\n\n<p><strong><em>NO ITC IN FRAUD CASES<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>&nbsp;ITC will not be available for any tax paid due to\nfraud cases which has resulted into \u2013<\/p>\n\n\n\n<ol><li>Non or short tax payment or<\/li><li>Excessive refund or<\/li><li>ITC utilised or<\/li><\/ol>\n\n\n\n<p>Fraud cases include fraud or willful misstatements or\nsuppression of facts or confiscation and seizure of goods.<\/p>\n\n\n\n<p><strong><em>NO ITC ON RESTAURANTS<\/em><\/strong><em><\/em><\/p>\n\n\n\n<p>As per&nbsp;Notification No. 46\/2017-Central Tax (Rate),\ndated&nbsp;14th November 2017, standalone restaurants will charge only 5% GST\nbut cannot enjoy any ITC on the inputs.<\/p>\n\n\n\n<p>However, restaurants as part of hotels with room tariffs\nexceeding Rs. 7,500 still continue pay 18% GST and enjoy ITC.<\/p>\n\n\n\n<p>McDonald\u2019s charges 5% GST and cannot claim any ITC.<\/p>\n\n\n\n<p>Taj\u2019s Grill by the Pool restaurant in Kolkata is a part of the Taj Bengal hotel and so it will charge 18% GST while enjoying ITC. &nbsp;<\/p>\n\n\n\n<p>QUESTIONS COVERED<\/p>\n\n\n\n<p>What do you mean by ITC System? Describe the basic conditions required to be fulfilled for getting credit of tax?<\/p>\n\n\n\n<p>What do you understand by ITC System? Do you agree that the registered person is only eligible for getting ITC? Discuss.<\/p>\n\n\n\n<p><strong>INPUT TAX CREDIT UNDER GST PDF<\/strong><\/p>\n\n\n\n<div class=\"wp-block-file\"><a href=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/INPUT-TAX-CREDIT-converted.pdf\"><strong>INPUT TAX CREDIT UNDER GST<\/strong><\/a><a href=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/INPUT-TAX-CREDIT-converted.pdf\" class=\"wp-block-file__button\" download>Download<\/a><\/div>\n\n\n\n<p><strong>JOIN THE CHANNEL ON TELEGRAM<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/t.me\/commerceiets\" target=\"_blank\">https:\/\/t.me\/commerceiets<\/a><\/p>\n\n\n\n<p><strong>CONNECT ON LINKEDIN&nbsp;&nbsp; <\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noopener\">https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>INPUT TAX CREDIT UNDER GST Input tax credit under GST&nbsp;means at the time of paying tax on output, the tax already paid on inputs can be reduced and only the balance amount a person is liable to pay. When you buy a product\/service from a registered dealer you pay taxes on the purchase. On selling,&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/input-tax-credit-under-gst\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;INPUT TAX CREDIT UNDER GST PDF&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":4106,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[229],"tags":[],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/4099"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=4099"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/4099\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/4106"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=4099"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=4099"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=4099"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}