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![Rule 36 (1)
Invoice Issued by
Supplier
In accordance
with Sec 31
Invoice by Supplier
in accordance with
Sec.31(3)(f)
[Sec9(3)/9(4)]
Subject to payment
of tax
Bill of Entry or
Similar Document
Customs Act
IGST on Imports
ISD Invoice / ISD
Credit Note / Any
Other Document
issued by ISD
Rule 36 (2)
ITC Shall be availed
only if all particulars
contained in said
documents and
relevant information
furnished in GSTR 2
Mandatory Content
of ITC Document
Amount ofTax
Charged, Description
of Goods / services
total value of supply,
GSTN of Supplier &
Recipient & Place of
Supply in case of Inter
State Supply
Rule 36 (3)
NO ITC shall be
availed in respect
of any tax that
has been paid
against any order
where demand
confirmed on
account of fraud,
willful
misstatement or
suppression of
facts
DOCUMENTARY REQUIREMENTS AND CONDITIONS
FOR CLAIMING INPUT TAX CREDITRule 36](https://image.slidesharecdn.com/20190505gstitcicaicertificatecourse-190506130251/75/GST-Input-Tax-Credit-7-2048.jpg)
![ITC availed on any Inward Supply but fail to pay supplier
with 180 Days [Sec 16(2)]
Amount of Value not paid ITC Credit Availed proportionate
to such amount to be added to Output Tax Liability.
In the month following the period of 180 Days from
date of Issue of Invoice
This provision not applicable for Sch I Supplies made without
consideration. Deemed to have been paid.
Pay Interest @ Notified U/s. 50(1) from period starting from date of
availing credit till amount added to OutputTax Liability.
Time limit U/s16(4) shall not apply to claim for re-availing any
credit which is reversed earlier under this provision.
REVERSAL OF INPUTTAX CREDIT IN CASE OF
NON PAYMENT OF CONSIDERATION
Rule 37](https://image.slidesharecdn.com/20190505gstitcicaicertificatecourse-190506130251/75/GST-Input-Tax-Credit-8-2048.jpg)
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GST Input Tax Credit
- 1. CA. VINODH KOTHARI CHARTEREDACCOUNTANT CHENNAI PH. 9566105599 SVINODHKOTHARI@GMAIL.COM ALL ABOUT GST INPUT TAX CREDIT
- 2. INPUT TAX -SEC 2(62) CA. VINODH KOTHARI svinodhkothari@gmail.com Input Tax Relation to Registered Person CGST / SGST / UTGST / IGST On Supply to him Includes IGST on Imports RCM Excludes Tax on Composition Levy Input used for furtherance of Business
- 3. INPUT TAX –RELATED TERMS CA. VINODH KOTHARI svinodhkothari@gmail.com Electronic Credit Ledger Sec 2(46) • ITC self- assessed in return of registered person. Capital Goods Sec 2(19) • Goods Capitalized in books of account • Used or intended to be used in the course of furtherance of Business Input Sec 2(59) • Any Goods • Other than Capital Goods • Used or intended to be used by supplier • In the course of furtherance of Business Input Service Sec 2(60) • Any Service • Used or intended to be used by a supplier • In the course of furtherance of business.
- 4. INPUT TAX CREDIT– TOPIC COVERAGE CA. VINODH KOTHARI svinodhkothari@gmail.com • Eligibility & Conditions Section • Credit & blocked credits Apportionment Section • Special Circumstances Section • ITC Documents & Conditions Rule 36 • ITC Reversal – Non Payment Rule 37 • Special Circumstance – Claim Procedure Rule 40 • ITC Transfer – Sale, Merger … Rule 41 • ITC Determination & Reversal – Input / Input Services Rule 42 • ITC Determination & Reversal – Capital Goods Rule 43 • Special Circumstances – Reversal Procedure Rule 44 ITC Provisions Applicable for Registered Dealer Only
- 5. • Registered Person •Seamless Availability of Credit • Electronic Credit Ledger • No input if willful suppression of facts or fraud Furtherance of Business • Tax Invoice / Debit Note / BOE • Receipt of Goods or Services • Direction of 3rd Party receipt by 3rd Party (GST Amendment Act) • Tax Paid (Supplier or RCM) • Returns Filed • Goods Sent against invoice in lots/installments – Credit only after receipt of last lots/installments. Primary Conditions • Payment not made within 180 Days – Reversal + Interest • Capital Goods – Depreciation claimed – No Input Tax credit (on ITCValue) • No credit after the due date of filing return - September following year. Special Scenarios INPUTTAX - ELIGIBILITY & CONDITIONSSection CA. VINODH KOTHARI svinodhkothari@gmail.com
- 6. ORDER OF UTILISATIONOF ITC CGST 1st CGST Balance IGST SGST 1st SGST Balance IGST IGST 1st IGST 2nd CGST Balance SGST CGST 1st IGST Balance CGST SGST 1st IGST Balance SGST IGST 1st IGST 2nd CGST Balance SGST EXISTING PROVISION AMENDED PROVISION CA. VINODH KOTHARI
- 7. Rule 36 (1) InvoiceIssued by Supplier In accordance with Sec 31 Invoice by Supplier in accordance with Sec.31(3)(f) [Sec9(3)/9(4)] Subject to payment of tax Bill of Entry or Similar Document Customs Act IGST on Imports ISD Invoice / ISD Credit Note / Any Other Document issued by ISD Rule 36 (2) ITC Shall be availed only if all particulars contained in said documents and relevant information furnished in GSTR 2 Mandatory Content of ITC Document Amount ofTax Charged, Description of Goods / services total value of supply, GSTN of Supplier & Recipient & Place of Supply in case of Inter State Supply Rule 36 (3) NO ITC shall be availed in respect of any tax that has been paid against any order where demand confirmed on account of fraud, willful misstatement or suppression of facts DOCUMENTARY REQUIREMENTS AND CONDITIONS FOR CLAIMING INPUT TAX CREDITRule 36
- 8. ITC availed onany Inward Supply but fail to pay supplier with 180 Days [Sec 16(2)] Amount of Value not paid ITC Credit Availed proportionate to such amount to be added to Output Tax Liability. In the month following the period of 180 Days from date of Issue of Invoice This provision not applicable for Sch I Supplies made without consideration. Deemed to have been paid. Pay Interest @ Notified U/s. 50(1) from period starting from date of availing credit till amount added to OutputTax Liability. Time limit U/s16(4) shall not apply to claim for re-availing any credit which is reversed earlier under this provision. REVERSAL OF INPUTTAX CREDIT IN CASE OF NON PAYMENT OF CONSIDERATION Rule 37
- 9. CREDIT & BLOCKEDCREDITS APPORTIONMENT Section PARTLY BUSINESS & OTHERS SEC 17(1) • Goods & Services or both used by Registered Person • Partly for business and party for other purpose • ITC Restricted to only Business use. PARTLY TAXABLE, EXEMPTED & SEZ SUPPLIES SEC 17(2) • Registered person effecting partly Taxable, Exempted & SEZ Supplies including Zero Rated Supply • ITC Restricted toTaxable & Zero Rated Supply EXEMPTED SUPPLY SEC 17(3) • Include • Supplies on which recipient liable to pay tax on reverse charge • Transaction in Securities • Sale of Land (Subject to Sch II (5)(b)) • Ineligible BANKING / NBFC SEC 17(4) • Option to use based on Sec 17(2) method (or) • Claim 50% of inputs, capital goods & input services rest shall lapse. • 50% Rule Not applicable on supplies made to Distinct person. CA. VINODH KOTHARI svinodhkothari@gmail.com As per Amended Act Exempt Supply shall not include Sch III items except Para 5 (Sale of Land)
- 10. INPUTTAX CREDIT NOTAVAILABLE Sec 17(5) AMENDED PROVISIONS Section Sec 17(5)(a) MotorVehicles for transportation of persons having approved seating capacity of not more than 13 person (including driver) Except Further Supply Imparting Training on Driving Transportation of Passengers Sec 17(5)(aa) Vessels and Aircraft Except Further Supply Imparting Training on Navigation ofVessel Imparting Training on Flying such Aircraft Transportation of Passengers Sec 17(5)(ab) Services of General Insurance, Services, Repairs and Maintenance relate to MotorVehicles,Vessels, Aircraft, referred in Sec 17(f) (a), (aa) Except Used for Specified Purpose Received by Manufacturer, Supply of General Insurance Service of Such Motor Vehicle,Vessel,Aircraft
- 11. INPUTTAX CREDIT NOTAVAILABLE SEC 17(5) AMENDED PROVISIONS Section > Food & Beverage > Outdoor Catering > Beauty Treatment > Health Services > Cosmetic & Plastic Surgery > Leasing, Renting / hiring of MotorVehicle,Aircraft,Vessel > Membership of a club, health & fitness center > Rent a Cab > Life / Health Insurance > Travel Benefit to employee on Vacation > Works Contract Service – Immovable Property > Construction of Immovable Property > Tax on Composition Scheme > Personal Consumption > Goods / Services received by Non Resident Taxable Person > Goods Lost / Stolen / Destroyed /W/off / Disposed / Free Sample Rent A Cab Food & Beverage Health & Insurance ITC Available If Obligatory Under any Law
- 12. C1 ITC Credited To ElectronicCredit Ledger T Total ITC for the period T1 ITC Used Other than Business T2 ITC – Exempt Supply T3 ITC Ineligible Sec 17(5) C1 T – (T1+T2+T3) MANNER OF DETERMINATION OF INPUTTAX CREDIT IN RESPECT OF INPUTS OR INPUT SERVICES AND REVERSAL THEREOF Rule 42 ITC on Inputs & Input Services U/s.17(1) or (2) Partly used for Business & Partly for Other Purpose, Partly for Taxable or Zero Rated Sales & Exempted Supplies T1, T2, T3, T4 Value as declared in GST Returns STEP 1
- 13. C2 Common Input Tax Credit T4 ITCused for supplies other than Exempted C2 C1 – T4 MANNER OF DETERMINATION OF INPUTTAX CREDIT IN RESPECT OF INPUTS OR INPUT SERVICES AND REVERSAL THEREOF Rule 42 D1 ITC Towards Exempt Supply E Aggregate Value Exempt Supply Tax Period D1 = (E /F) X C2 F Total Turnover in State in Tax Period STEP 3 STEP 2 No turnover during Tax Period E or F value based on last Tax Period
- 14. D2 ITC attributable toNon Business purpose if Common inputs used partly for business / non business D2 5% of C2 MANNER OF DETERMINATION OF INPUTTAX CREDIT IN RESPECT OF INPUTS OR INPUT SERVICES AND REVERSAL THEREOF Rule 42 C2 Common ITC (D1 +D2) Common ITC on Exempt Supply & Non Business Purpose C3 Common ITC to Business Purpose other than Exempt Supply STEP 6 STEP 5
- 15. MANNER OF DETERMINATIONOF INPUTTAX CREDIT IN RESPECT OF INPUTS OR INPUT SERVICES AND REVERSAL THEREOF Rule 42 C3, D1, D2 Compute separately for CGST / SGST / IGST D1 & D2 Reverse in GSTR 3B or GST DRC 3 C3, D1, D2 Calculate for Every Tax Period and finally for FY such Excess shall be declared before Sep following Such reversed finally for FY Interest U/s 50(1) should be paid. D1 & D2 exceeds amount calculated finally such amount shall be claimed as credit in return
- 16. SPECIAL CIRCUMSTANCESSection CA. VINODHKOTHARI svinodhkothari@gmail.com ITC Special Circumstance Person applied for registration within 30 days from the day he become liable to register Sec 18(1)(a) ITC Available for Inputs, Semi Finished Goods & Finished Goods On Day Immediately preceding date from which he becomes liable to pay tax Person Applied for Voluntary Registration Sec 18(1)(b) ITC Available for Inputs, Semi Finished Goods & Finished Goods On day immediately preceding the date of registration Registered person ceases to pay tax under composition scheme Sec 18(1)(c) ITC Available for Inputs, Semi Finished Goods Finished Goods, Capital Goods On day immediately preceding the date from which he becomes liable to pay tax Exempt Supply of Goods/Services by Registered Person becomes taxable Sec 18(1)(d) ITC Available for Inputs, Semi Finished Goods Finished Goods, Capital Goods On day immediately preceding the date from which such supply becomes taxable. ITC - Date of Issue of Invoice <= OneYear Sec 18(2)
- 17. • ITC shallbe claimed after reducing tax paid by 5% points per quarter of a year or part thereof • From date of Invoice or such other documents . Capital Goods Sec 18(1)(c)&(d) • Within 30 Days from date of becoming eligible to avail ITC U/s. 18(1) or as Extended • Declaration in Form GST ITC 01 E Form & Time limit • Sec 18(1)(a) – Regular Registration -Day immediately preceding the date from which becomes liable to pay. • Sec 18(1)(b) –Voluntary Registration – Day Immediately preceding date of grant of registration • Sec 18(1)(c) – Composition to Regular – Day immediately preceding the date from which he becomes liable to pay tax • Sec 18(1)(d) – Exempt becomesTaxable – Day immediately preceding the date from which the supplies becomes taxable Cut off Date U/s.18 • Details Furnished in Declaration Form GST ITC 01 shall be certified by Practicing Chartered Accountant or Cost Accountant • If Aggregate value of claim CGST+SGST/UTGST+IGST exceeds Rs.2 Lakhs. Certificate • ITC Claimed for Sec 18(1)(c)&(d) shall be verified with corresponding details filed by supplier in GSRR 1 / GSTR 4.Form 2AVerification • MANNER OF CLAIMING CREDIT IN SPECIAL CIRCUMSTANCES Rule 40
- 18. CA. VINODH KOTHARI svinodhkothari@gmail.com CHANGEIN CONSTITUTION SEC 18(3)Section Change in Constitution of Registered Person On account of Sale Merger Demerger Amalgamation Lease or Transfer of Business Transfer of unutilized ITC in the Electronic Credit Ledger to such Sold Merged Demerged Amalgamated Leased Transferred Business Procedure to Claim Rule 41
- 19. CA. VINODH KOTHARI svinodhkothari@gmail.com Eligiblecredit carried forward in the return Amount equivalent to the cred of input tax in respect of input held in stock or input contained in semi finished goods or finished goods held in stock and on capital goods reduced by such percentage points on the day immediately preceding the date of exercising such options Such amount shall be payable by debiting the electronic credit ledger or electronic cash ledger Balance in Electronic credit ledger shall lapse. CAPITAL GOODS ON WHICH ITC CLAIMED Pay amount equal to the ITC taken reduced by such percentage points as may be prescribed or tax on transaction value which ever is higher ITC – REGULAR TO COMPOSITION – PAY AND EXITSection
- 20. Rule 41 E-FORM • Transferof Unutilized ITC lying in Electronic Credit Ledger to Transferee • Form GST ITC-02 • In case of Demerger ITC shall be apportioned in ratio of value of assets as per scheme. • Value of Assets meansValue of entire assets of Business whether ITC availed or not CERTIFICATE • Certificate by Practicing Chartered Accountant or Cost Accountant • Certifying transfer of business has been done with a specific provision for the transfer of liabilities. ACCEPTANCE • Post filing of GST ITC-02 • Transferee shall accept in common portal details furnished byTransferor ACCOUNTING • Inputs and Capital Goods so transferred shall be duly accounted by the transferee in his books of accounts. RULE 41A • Transfer of credit on obtaining separate registration for multiple places of business within a state or UT • ITC in Electronic Credit Ledger to newly registered unit • Within 30 day from obtaining registration • Form GST ITC-02 • Acceptance byTransferee TRANSFER OF CREDIT ON SALE, MERGER, AMALGAMATION, LEASE ORTRANSFER OF BUSINESS
- 21. MANNER OF DETERMINATIONOF INPUTTAX CREDIT IN RESPECT OF CAPITAL GOODS AND REVERSAL THERE OF IN CERTAIN CASESRule 43 ITC on Capital Goods being PARTLY used for Business or other purpose or forTaxable Supply including Zero Rated and Exempted Supply (a) ITC on Capital Goods – No Claim • Used for non- business purposes or exempt supplies • Shall not be credited to Electronic Credit Ledger (b) ITC on Capital Goods - Claim • Used only for effecting other than Exempt supply but including Zero Rated • Shall be credited to Electronic Credit Ledger (c) Balance ITC on Capital Goods • ITC not covered in (a) & (b) denoted as A • Credit to Electronic Credit Ledger • Useful life of such goods shall be 5 years from date of Invoice
- 22. MANNER OF DETERMINATIONOF INPUTTAX CREDIT IN RESPECT OF CAPITAL GOODS AND REVERSAL THERE OF IN CERTAIN CASESRule 43 ITC on Capital Goods Reversal of Common Credit used for both Taxable, Non Business & Exempt Supply If any Capital Goods covered in (b) is covered in (c) ‘A’ arrived by reducing ITC @ 5% point for every Quarter or Part A=Tc ITC attributable to tax period on common capital during their useful life Tm =Tc / 60 Tm Common ITC towards Exempt Supply Te = (E/F) xTr Te
- 23. INPUTS • Calculated Proportionately • Basedon Corresponding Invoices CAPITAL GOODS • Based on Remaining useful life in months / pro rata basis • Taking useful life as 5 years • Amount determined more than tax on transaction value • Declare in Form GSTR -1 – Output Liability OTHERS CONDITIONS • Calculate separately for CGST/SGST/IGST • Invoice not available based on estimate market price on date of occurrence REVERSAL • ITC Calculated form part of Output Tax Liability • Form GST ITC 03 • In case of cancellation Form GSTR 10 • Certified by Cost / Chartered Accountant MANNER OF REVERSAL OF CREDIT UNDER SPECIAL CIRCUMSTANCESRule 44
- 24. ITC - OTHERS •ITC on Schedule I Supplies Schedule I – Activities to be treated as supply even if made without consideration. ▪ PermanentTransfer or Disposal of BusinessAsset ▪ Supply of goods or services between related / distinct persons (exception Gift not exceeding 50000 in FY by Employer to Employee) ▪ Principal / Agent ▪ Import of Service from any other establishment outside India in the course or furtherance of business • Cancellation of GST – As per Section 29(5) of the CGST Act 2017, every registered taxable person whose registration is cancelled shall pay an amount, by way of debit in the electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock, or capital goods or plant and machinery, on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher.
- 25. ISSUES IN ITC •Can ITC be utilized to pay RCM U/s. 9(3) • Is ITC available if Goods are received but Invoice is not received • Company received FD Interest along with other Taxable Supply is Rule 43 Applicable • Is ITC Available on goods lost during production process • Registered Dealer gives gift to its customer on NewYear – ITC Credit Available or Not • Registered Dealer making NIL Rated Supply andTaxable Supply should he follow Rule 42 / Rule 43 • When in the ITC available in the following case – Date ofTravel : 12/9/19 – Date of Booking / Making Payment : 2/4/19 – Date of Invoice : 2/4/19
- 26. ITC ISSUES • CanITC be claimed on Motor Car used for the purpose of Demo by a Car Dealer ? (AAR) • Registered Dealer using Cash CarryVan whether ITC Available on purchase ofVehicles used of carrying cash ? • A person has single registration but 2 different trade name can he set off ITC of one trade name against the other? • ABC Ltd engaged in supply of works contract services he gives one part of work to another Contractor PQR Ltd. PQR Ltd charges GST can ABC Ltd Claim ITC • Hi Rise Hotel give work contract for construction of Hotel to be use for business purpose.Works Contractor charges GST is ITC Claimable.
- 27. CA.VINODH KOTHARI Chartered Accountant Email: vk@cakothari.com