Category: Input Tax Credit

Yes. Section 19(2) and Section 19 (5) allows the principal to take input tax credit of goods not received by him, if the goods are sent directly to the job workers premises by the vendor.

(ICAI FAQ PUBLICATION 06-09-2017 -: ITC in respect of goods sent for job work: FAQ NO.34)

 

The time limit prescribed for return of goods sent to job work under the exemption route is 1 year of being sent out (for inputs) and 3 years of being sent out (for capital goods). Therefore, if the inputs/ capital goods are returned to the principal after 1 year/ 3 years (as applicable), then such return of goods to the principal after the said period would be treated as ‘supply’. This time limit is not applicable to moulds and dies, jigs, fixtures and tools.

(ICAI FAQ PUBLICATION 06-09-2017 -: ITC in respect of goods sent for job work: FAQ NO.33)

Yes. In terms of proviso to Section 18(6) of CGST Act, in case of supply of such goods as scrap, the registered person is required to pay the tax on the transaction value of such goods. Thus, in this case, unlike section 18(6), no comparison is required to be made between ITC taken on the capital goods/plant and machinery reduced by the specified percentage points and the tax on the transaction value of such goods

(ICAI FAQ PUBLICATION 06-09-2017 -: Availability of Credit in special circumstances: FAQ NO.32)

Yes, in terms of Section 18(6) of CGST Act, in case of supply of capital goods or plant and machinery on which input tax credit has been taken, the registered person will have to pay an amount equal to:
 Input tax credit taken on the said capital goods/ plant and machinery reduced by the percentage points specified ; or
 the tax on the transaction value of such goods whichever is higher.

(ICAI FAQ PUBLICATION 06-09-2017 -: Availability of Credit in special circumstances: FAQ NO.31)

1. There is no specific provision under the Act prohibiting transfer of such unutilized credit. Rather, Section 18(3) specifically provides that when there is a change in constitution of a registered person on account of sale, merger, or amalgamation of business with specific provision of transfer of liabilities, the registered taxable person shall be allowed to transfer the input tax credit which remains unutilized, provide registered person furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the common portal along with a request for transfer of unutilized input tax credit lying in his electronic credit ledger to the transferee.
2. Therefore, if the recipient is registered under the Act, he should be
   eligible to claim such unutilized credits.
3. In a situation, where the recipient is not registered under the Act, he may have to make a fresh application for registration and claim such unutilized credits after making an intimation to the department.

(ICAI FAQ PUBLICATION 06-09-2017 -: Availability of Credit in special circumstances: FAQ NO.29)

The credit attributable to exempt supplies in such cases are determined as under in terms of Rule 42 of the CGST Rules, 2017:
D1 = (E/F) x C2
Where
D1 = Credit attributable to exempt supplies
E = aggregate value of exempt supplies (all supplies other than taxable and zero rated supplies)
F = total turnover of the person in the tax period
C2 = Common Credit i.e. Total input tax in a period reduced by:
 Tax attributable exclusively for non-business purpose
 Tax attributable exclusively for exempt supplies
 Ineligible credits as per Section 17(5)
 Tax attributable exclusively for taxable supplies (including zero rated
supplies)

(ICAI FAQ PUBLICATIONS 06-09-2017 INPUT TAX CREDIT: FAQ NO. 56)

In terms of Rule 42(j) of the CGST Rules, 2017, the credit attributable to non-business
purpose (D2) will be equal to 5% of C2 [Common Credit]’ (Refer Answer to Q56)

(ICAI FAQ PUBLICATIONS 06-09-2017 INPUT TAX CREDIT: FAQ NO. 57)

The eligible credit in such cases are determined as under in terms of Rule 42 (k) of the CGST Rules, 2017:
Net eligible credit [C3] = C2 – (D1 + D2)
D1 = Credit attributable to exempt supplies
D2 = Credit attributable to non-business purposes (5% of C2 i.e. Common Credit)

(ICAI FAQ PUBLICATIONS 06-09-2017 INPUT TAX CREDIT : FAQ NO. 58)