Category: Input Tax Credit

The expression “plant and machinery” has been defined in Explanation to Section 17 for the purpose of Chapter V or VI of the CGST Act. It means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes—
(i) land, building or any other civil structures;
(ii) Telecommunication towers; and
(iii) Pipelines laid outside the factory premises.

(ICAI FAQ PUBLICATION 06-09-2017 -: Apportionment of credit and blocked credits: FAQ NO.23)

1. Input tax credit is not available on goods or services received by a taxable person for construction of an immovable property on his own account other than plant and machinery even when used in course or furtherance of business.
2. The word “construction” includes reconstruction, renovation, additions or alterations or repairs to the extent of capitalization to the said immovable property.
3. If the cost of interiors is capitalized towards the cost of immovable property then it forms part of the cost of immovable property (Service apartment) and accordingly taxes paid on change of interiors of service apartment will not be eligible as input tax credit.

(ICAI FAQ PUBLICATION 06-09-2017 -: Apportionment of credit and blocked credits: FAQ NO.22)

Tax paid w.r.t rent a cab services, life/ health insurance services will be eligible as input tax credit subject to the following conditions:

 If the Government notifies that such services are obligatory for an employer to provide to its employees under any law for the time being in force, or
 Such services are used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply.

(ICAI FAQ PUBLICATION 06-09-2017 -: Apportionment of credit and blocked credits: FAQ NO.21)

Yes. Section 17(5) (b)(iii) of the CGST Act provides that tax paid w.r.t rent a cab
services, life/ health insurance services will be eligible as input tax credit where the Government notifies that such services are obligatory for an employer to provide to its employees under any law for the time being in force.

(ICAI FAQ PUBLICATION 06-09-2017 -: Apportionment of credit and blocked credits: FAQ NO.20)

The restriction of input tax credit on motor vehicles and conveyances provided under Section 17 (5) (a) is on such motor vehicles/ conveyances except when they are used for further supply of vehicles/ conveyances, transportation of passengers, imparting training or for transportation of goods only. Therefore, input tax credit will be available when it is used by courier agency, outdoor catering, pandal and shamiana and tour operator as it covers use of vehicles for transportation of goods/ transportation of passengers.

(ICAI FAQ PUBLICATION 06-09-2017 -: Apportionment of credit and blocked credits: FAQ NO.19)

Yes. The mobile phones/ laptops would be covered under the definition of ‘inputs’ as they are used in the course/ furtherance of business and hence, the input tax paid on such goods will be available as input tax credit.

(ICAI FAQ PUBLICATION 06-09-2017 -: Apportionment of credit and blocked credits: FAQ NO.18)

In the process of manufacture, if some inputs become waste and are sold as scrap, credit shall not be denied. Further, output tax shall be payable on sale of such waste/scrap. However, Section 17(5) (h) specifically restricts input tax credit on goods lost, stolen, destroyed, written off or disposed by way of gift or free samples. Therefore, if the goods have been destroyed in full, input tax credit will not be available.

(ICAI FAQ PUBLICATION 06-09-2017 -: Apportionment of credit and blocked credits: FAQ NO.16)

No. Section 17(5) (h) specifically restricts input tax credit on goods disposed of by way of gift or free samples.

(ICAI FAQ PUBLICATION 06-09-2017 -: Apportionment of credit and blocked credits: FAQ NO.15)

No, a Banking Company/ Financial Institution engaged in supplying services by way of accepting deposits, extending loans or advances has the following options:
 Comply with the provisions of Section 17(2) regarding restriction of credits
relatable to exempt supplies in the manner prescribed; or
 Avail 50% of the eligible input tax credit every month on inputs, capital goods and input services and the remaining 50% shall not be available.
The option exercised cannot be withdrawn in the same year. The restriction of 50% will not apply to the tax paid on supplies made by one registered person to another registered person having the same PAN.

(ICAI FAQ PUBLICATION 06-09-2017 -: Apportionment of credit and blocked credits: FAQ NO.13)

‘Exempt Supplies’ for this purposes means all supplies other than taxable and zero rated supplies and specifically include the following:
 Supplies liable to tax under reverse charge mechanism;
 Transactions in securities;
 Sale of land;
 Sale of building

(ICAI FAQ PUBLICATION 06-09-2017 -: Apportionment of credit and blocked credits: FAQ NO.12)