Category: Input Tax Credit

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Whether capital goods can be considered as inputs?

No, ‘Inputs’ are defined under Section 2(59) of the CGST Act to mean any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business.
‘Capital goods’ are defined under Section 2(19) of the CGST Act to mean goods, the value of which is capitalized in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business.

(ICAI FAQ PUBLICATION 06-09-2017 INPUT TAX CREDIT: FAQ NO.1)

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What is Input Tax Credit

  1. A person doing business will be purchasing goods/ availing services for making further supplies in the course or furtherance of business. When such purchases are made by him, tax would have been charged by his supplier and
    collected from him.
  2. Since tax is collected from him, he can avail credit of the tax paid by him to his supplier (that is to say, he can use this amount for making payment of tax due from him on further supply made by him).This is known as input tax credit for the recipient.

(FAQ 8: MSME)

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We are a small saree manufacturer at Surat. We buy ready dyed fabrics and get job work, hand work, stitching etc. done to create designer sarees. Wholesalers and retailers from all over India buy these sarees on credit basis for 30 days to 240 days.Is government assuring of payment within 180 days. There are rumours that the wholesaler/retailer has to pay within 180 days. Is it true?

As per the second proviso to Section 16(2)(d) of the CGST Act, 2017 if a recipient of the supply does not pay to its supplier the value of the supply along with the tax within 180 days from the date of issue of invoice by the supplier, the amount of ITC availed proportionate to the unpaid amount would be added to the output tax liability of the recipient of the supply along with the interest thereon. The credit so reversed can be reclaimed when the value is paid to the supplier along with the tax thereon. Thus the government is not assuring payment within 180 days.

(FAQ-7(c) TEXTILES)

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What is the effect of non-payment of consideration in respect of taxable supplies received by the recipient

  1.  If the recipient fails to pay to the supplier the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, the amount of input tax credit availed proportionate to the amount of consideration not paid
    would be added to his output tax liability along with Interest thereon.
  2. The ITC so reversed can be reclaimed by the recipient after payment of consideration along with tax payable there on subsequently.
  3. This provision is not applicable in respect of deemed supplies made without consideration in terms of Schedule I to the CGST Act, 2017.

( FAQ 13: DRUGS AND PHARMACEUTICALS)

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Extension of Due date of filing of Return GSTR-6 by ISD for July and Aug 2017

Date for GST return GSTR-6  by ISD for July and August 2017 has been extended to

  • 8th September for July 2017
  • and to 23rd September for August 2017

[Notification 26/2017-CT  dated 28-08-2017]

Comments :

  1.  The above dates have been set just two days before due dates for GSTR-2.
  2. As per Rule 59(5) , The details of invoices furnished by an Input Service Distributor in his return in FORM GSTR-6 under rule 65 shall be made available to the recipient of credit in Part B of FORM GSTR 2A electronically through the common portal and the said recipient may include the same in FORM GSTR-2.
  3. GSTR-6 by ISD is required to be filed under Rule 65 by taking into consideration the information in GSTR-6A.  As per Rule 59(3), information submitted by supplier in GSTR-1 relating to ISD travels to ISD through GSTR-6A