This PPT contains summarised provisions and rules of claiming GST Input Tax Credit.

1. CA. VINODH KOTHARI
CHARTERED ACCOUNTANT
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 UTILISATION OF 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)
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

8. 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

9. CREDIT & BLOCKED CREDITS
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 NOT AVAILABLE 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 NOT AVAILABLE 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
Electronic Credit
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
ITC used 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 to Non 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 DETERMINATION OF 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. VINODH KOTHARI
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 shall be 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
CHANGE IN 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
Eligible credit 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
• Transfer of 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 DETERMINATION OF 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 DETERMINATION OF 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
• Based on
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
• Can ITC 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