Category: Input Tax Credit

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Avail ment of ITC for pre registration period by filing GST ITC -01 extended till 31-10-2017 by Notification 44/2017 dated 13-10-2017

As per section 18(1), credit of inputs can be availed for pre transition period in following cases :

  1. Compulsory registration is applied with in 30 days from being liable
  2. Voluntary registration
  3. Exempted goods become taxable. Also entitled to credit for capital goods
  4. Swithcing from Composition to Normal Scheme. Also entitled to credit for capital goods

 

However the availment of credit is subject to filing GST ITC-01 providing the detail of inputs and capital with in 30 days from above transitions. However since GST-ITC-01 is not still available on the portal, the date for filing ITC-01 has been extended to 31-10-2017

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What are the conditions for transfer of credit on account of sale, merger, amalgamation, de-merger, lease, transfer of business?

The conditions prescribed under Rule 41 of the CGST Rules, 2017 are:
(a) The details of the sale, merger, amalgamation, de-merger, lease, transfer of business should be furnished in Form GSTR ITC-02.

(b) A certificate issued by a practicing Chartered/ Cost Accountant should be furnished certifying that the sale, merger, amalgamation, de-merger, lease, transfer of business has been done along with a provision for transfer of liabilities.

(c) Upon acceptance of the details by the transferee, the credit specified in  form GSTR ITC-02 will be credited to the electronic credit ledger.

(d) The inputs and capital goods so transferred are to be accounted in the transferee’s books

(ICAI FAQ PUBLICATION 06-09-2017 -: Input Tax Credit: FAQ NO. 55)

 

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What are the conditions for claim of credit w.r.t. inputs/ capital goods lying in stock in case new registration, voluntary registration, change of the scheme from Composition to Regular scheme?

The conditions prescribed under Rule 40 of the CGST Rules, 2017 are as under:

(a)The credit on capital goods can be claimed after reduction of 5 percentage points per quarter from the tax paid on such capital goods from the date of invoice or such other documents on which the capital goods were received by the taxable person

(b) The registered person shall within a period of 30 days from the date of his becoming eligible to avail the input tax credit under section 18(1) shall make a declaration, electronically, on the common portal in FORM GST ITC-01 to the effect that he is eligible to avail the input tax credit as aforesaid. The declaration shall clearly specify the details relating to the inputs held in stock or inputs contained in semi-finished or finished goods held in stock, or as the case may be, capital goods–
(i) on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of the Act, in the case of a claim under section 18(1)(a);
(ii) on the day immediately preceding the date of the grant of registration, in the case of a claim under section 18(1)(b);
(iii) on the day immediately preceding the date from which he becomes liable to pay tax under section 9, in the case of a claim under section 18(1)(c);
(iv) on the day immediately preceding the date from which the supplies made by the registered person becomes taxable, in the case of a claim under
section 18(1)(d);
(c) The details furnished should be certified by a practicing Chartered/ Cost Accountant if the aggregate value of claim of credit on account of  Central Tax, State Tax, Union territory Tax and Integrated Tax exceeds Rs. 2 Lakh.
(d) The credit details furnished will be matched and verified with the corresponding details furnished by the supplier in FORM GSTR-1 or Form GSTR-4 on the common portal.

(ICAI FAQ PUBLICATION 06-09-2017 -: Input Tax Credit: FAQ NO. 52)

 

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How any ITC required to be reduced on account of issuance of a credit note to the ISD by the supplier shall be dealt with?

In terms of Rule 39(1) (j) of the CGST Rules, 2017 any ITC required to be reduced on account of issuance of a credit note to the ISD by the supplier shall be
 reduced from the amount to be distributed in the month in which the credit note is included in the return in FORM GSTR-6; and
 Added to the output tax liability of the recipient and where the amount so
apportioned is in the negative by virtue of the amount of credit to be distributed is less than the amount to be adjusted.

(ICAI FAQ PUBLICATION 06-09-2017 -: Input Tax Credit: FAQ NO. 51)

 

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What are the documents to be issued by an ISD?

In terms of Rule 39(1)(g) of the CGST Rules, 2017, an ISD is required to issue an ISD invoice as prescribed in Rule 54(1) indicating that the invoice is issued only for distribution.
Similarly, in terms of Rule 39(1)(h) of the CGST Rules, 2017, an ISD is required to issue a credit note as prescribed in Rule 54(1) for reduction of credit (if already distributed).

(ICAI FAQ PUBLICATION 06-09-2017 -: Input Tax Credit: FAQ NO. 49)

 

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How will the integrated tax, central tax and state tax be distributed?

In terms of Rule 39(1) (f) of the CGST Rules, 2017, the distribution is to be made by an ISD as follows:
(a) Integrated tax as integrated tax.
(b) Central tax as central tax (if the recipient and ISD are located in the same State) and as integrated tax (if the recipient and ISD are not located in the same State).
(c) State tax as state tax (if the recipient and ISD are located in the same State) and as integrated tax (if the recipient and ISD are not located in the same State).
(d) In case of distribution of central/ state tax as integrated tax, it should be ensured that the amount distributed equals the amount of credit of central and state tax put together.

(ICAI FAQ PUBLICATION 06-09-2017 -: Input Tax Credit: FAQ NO. 48)