1. Input Tax Credit with Rules
CA.PREETY PARIK

2. GST- Definitions wrt ITC
Sec.2(63) “input tax credit” means credit of ‘input tax
Sec.2(62) input tax" in relation to a registered person, means Central tax, State tax, integrated tax, Union Territory Tax charged on supply of Goods or Services or both to him and includes IGST on imports, tax paid under reverse charge but does not include Tax paid under Composition Scheme.
Sec.2(59) “input” means Goods other capital goods used or intended to be used by a supplier in course of furtherance of business

3. GST- Definitions wrt ITC
Sec.2(19) “Capital Goods” goods, the value of which is capitalised 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 of furtherance of business.
Sec.2(60) “Input Service” means any service used or intended to be used by a supplier in the course of furtherance of business.

4. Input Tax Credit –Chapter V Sec.16 To Sec.21
Sec.16- Eligibility and conditions for taking credit
Sec Apportionment of credit and blocked credit
Sec credit in special circumstances
Sec Credits wrt Job Work
Sec.20 – Distribution of Credit by ISD

5. Eligibility and Conditions – Sec.16
Only Registered Taxable Person can Claim credit.
Credit of Input Tax
Charged on Any Supply of Goods/ or Services to him which are used or intended to be used in course or furtherance of his business.
Credit is subject to conditions and restrictions
Manner specified in Sec.49
Such claim shall be credited to the electronic ledger of such person

6. Manner of Set off- Sec.49 INPUT TAX OUTPUT TAX CGST CGST IGST
SGST SGST
3. IGST IGST
CGST
SGST
4. UTT UTT
*******CGST XXX SGST

7. Input Tax credit- Sec.16(2)
Conditions to Claim Credit:-
Possession of Tax Invoice or debit note of registered supplier or such other Tax paying Document, as may be prescribed.
Receipt of Goods or Services or Both
Payment of Tax by the Supplier *
Filing of Return –GSTR3
* Subject to Sec.41 –claim of credit on self assessment basis and it shall be credited to electronic credit ledger on provisional basis. This provisional credit can be utilized for payment of output tax

8. Input Tax credit- Sec.16(2)
Conditions to Claim Credit:-
Goods against invoice are received in lots or installments, credit upon receipt of last lot
Goods are delivered by supplier to a recipient on direction of a registered person, it shall be deemed goods are received by such registered person by way of transfer of document of title to goods or otherwise
Payment of Value of Supply alongwith Tax (consideration) to be paid within 180 days from date of issue of invoice by supplier

9. Input Tax credit Conditions to Claim Credit:-
ITC not allowed if depreciation claimed on Tax component of the cost of capital goods.
Threshold Time Limit for claim -Credit of Invoice/ debit note not available after due date of furnishing of return under Sec.39 for the month of September following the end of FY or furnishing of the relevant annual return, whichever is earlier.

10. Input Tax credit Sec-17 Restrictions on Credit:-
To the Extent Goods/ Services are used for purpose of business ** (Non business)
To the Extent goods/ Services used for purpose of Taxable Supplies including Zero rated supplies ** (Exempt Supplies)
Exempt Supply= Nil rate, wholly exempt u/s11 or 6 of IGST, non taxable supply, recipient liable to pay tax on RCM, transactions in securities, sale of land, sale of building.

11. Input Tax credit Sec-17 Restrictions on Credit:-
In case of Banks/NBFC/ financial institution- supplying services, option to claim, every month, 50% of input tax credit on input, input tax service and capital goods of that month and the rest shall lapse (option once taken shall remain for whole year).
Above NA supplies between RP having same PAN

12. Blocked Credits Sec.17 NOT AVAILABLE AVAILABLE
Motor Vehicles and other conveyance
If used for transportation of Goods
For Making Taxable Supplies of
Further supply of Vehicles
Transportation of passengers
Imparting Training on driving, flying, navigating such vehicles or conveyances

13. Blocked Credit NOT AVAILABLE AVAILABLE Supply of Food/beverages
outdoor catering
beauty treatment
health services
cosmetic/ plastic surgery
If Outward Taxable Supply is
Food/beverages
outdoor catering
- beauty treatment
health services
cosmetic/ plastic surgery.
Or element of taxable composite/ mixed supply

14. Blocked Credit NOT AVAILABLE AVAILABLE Rent a Cab Life Insurance
Rent a cab, Life and health insurance
Rent a Cab
Life Insurance
Health Insurance
Government notifies it to obligatory to provide to its employees under any law
Outward Supply of
Rent a cab
Or part of taxable composite or mixed supply

15. Blocked Credit Membership of club Fully NOT AVAILABLE
Travel benefits to employees on vacation such as Leave or home Travel Concession
Membership of club
Membership of Health and fitness centre

16. Blocked Credit NOT AVAILABLE AVAILABLE
Works Contract Service for construction of immovable property
Goods/ services for construction of immovable property on own account
Works contract service if for construction of Plant and Machinery
Works contract Service if input service for further supply of works contract service
Goods/ services for construction of
Plant and Machinery

17. Definitions
Construction – re-construction, renovation, alteration, repairs to the extent of capitalization to the property
Plant and Machinery- apparatus, equipment and machinery fixed to earth by foundation/ structural support , used for making outward supply of goods or services
- includes Foundation or structural support
- excludes
land, building, civil structures, telecommunication towers, pipeline laid outside factory premises

18. Blocked Credit Fully NOT AVAILABLE
Goods/ Services for personal Consumption
Goods Lost/Stolen/ destroyed/ gift/ free samples.
Goods/ Services, on which tax is paid under composition scheme.
Tax paid on detection of fraud, willful misstatement, suppression of facts, detention, seizure of goods in transit, confiscation of goods
Goods/ Services received by NR taxable persons other than goods imported by him.

19. ITC – Special Circumstances
Credit Available
From When
Conditions
Person Exceeding Threshold Turnover/
Input Tax on Inputs held in Stock,
Inputs contained in Semi Finished or Finished Stock
On the day preceding date on which he becomes liable to pay tax
If he has applied for registration within 30 days
Date of Invoice less than one year
Voluntary Registration
On the day preceding the date of grant of registration
Date of invoice less than one year

20. ITC – Special Circumstances
Credit Available
From When
Conditions
Person ceases to pay tax under Composition Scheme
Input Tax on Inputs held in Stock,
Inputs contained in Semi Finished or Finished Stock
Capital Goods
From the day preceding date from which he is liable to pay tax under Sec.8
Credit of capital shall be reduced by 5% points per quarter from DOI as may be prescribed
Date of invoice < one year
Exempt Supply becomes Taxable Supply
Inputs held in Stock, contained in Semi Finished or Finished used for exempt
Capital Goods used wholly for exempt supply
On the day preceding the date from which exempt supply becomes taxable supply
---”---

21. ITC – Special Circumstances
Credit Available/ PMT
Conditions
Change in Constitution on going concern basis
ITC that remains unutilized in its electronic Credit ledger of the transferor
Specific provision of transfer of liabilities
Person Switches to Composition levy
Goods/Services becomes wholly Exempt
Pay Input Tax on Inputs held in Stock,
Inputs contained in Semi Finished or Finished Stock
Capital Goods
On the day preceeding
of exemption/ date of switch over
Pay amount by way of debit in GST PMT2
Balance of ITC shall lapse
Calculation of amt to be prescribed

22. ITC – Special Circumstances
Payment of Tax
Supply of Capital Goods or plant and Machinery
On which ITC has been taken
Amount payable = ITC Taken – 5% percentage points per quarter from or date of Invoice
Transaction Value
Whichever is higher
If Supply of Refractory bricks, Moulds, dies, jigs and fixtures, supplied as SCRAP
Amount payable = Tax on Transaction Value

23. Input Tax credit -Rules
Eligible Document for Claiming Credit
Tax Invoice as per Sec.31
Debit Note
Bill of entry
Invoice issued by Recipient (in case of RCM)
ISD invoice or credit note
All applicable particulars as per Invoice Rules on the above document
Relevant information from Tax Invoice to be submitted in GSTR2

24. Input Tax credit -Rules
In case of reversal of credit on non payment of consideration within 180 days, furnish details of such supply, value not paid, propionate ITC on amount not paid, in GSTR2 in the month following the period of 180 days.
Added as output tax for month in which details are given
Interest shall be payable from date of availing credit till the date when amount added to output tax liability.
Time limit of 180 days shall not apply in case of re-availing of credit
Supplies made without consideration specified in Schedule I – deemed to be paid- provision NA

25. Input Tax credit -Rules
In case of claim of eligible credit in case of special circumstance - Sec.18 (1) a,b,c,d
Registered person to make declaration within 30 days
Form GST ITC -01 to effect that he is eligible to claim ITC
Details of stock of input, inputs in finished/semi finished/ capital goods
If aggregate of eligible ITC > 2 lacs, details to be certified by CA or CWA
The above details will be matched with corresponding details furnished by supplier in GSTR1 or GSTR4

26. Common Inputs Business/ Non Buisness, Tax/ Non Tax
Reversal of ITC on Inputs
In GSTR-2 details of all inputs received from registered person to be furnished at invoice level.
ITC not to be claimed (or not be credited to electronic credit ledger) :-
ITC on inputs used exclusively for non business
ITC on inputs used exclusively for non taxable purpose
-ve list inputs
* Claim full credit on common inputs used for taxable and exempt supplies in GSTR-2 ( Say C2)
* claim full credit on common inputs used on business and non business purpose (Say C2)

27. Common Inputs Business/ Non Buisness, Tax/ Non Tax
Determine ITC related to Exempt Supply (say D1)
D1= exempt Turnover/ total Turnover * C2
Determine ITC related to non business purpose (say D2)
D2= C2 * 5%
Tax payable = D1+ D2 = Add to output tax liability
Final reconciliation to be made
Aggregate D1+D2 declared and finally computed on annual turnover before filing of return of sept of following year. Make adjustment for Following
If declared is more than computed, claim credit
If declared is less than computed, pay tax along with interest.

28. Common Capital Goods Business/ Non Buisness, Tax/ Non Tax
Reversal of ITC on Common Capital goods
In GSTR-2 details of all capital goods received from registered person to be furnished at invoice level.
ITC not to be claimed (or not be credited to electronic credit ledger) :-
ITC used exclusively for non business
ITC on inputs used exclusively for non taxable purpose
-ve list capital goods
* Claim full credit on common capital goods used for taxable and exempt supplies in GSTR-2 ( Say C2)
* claim full credit on common capital goods used on business and non business purpose (Say C2)

29. Common Capital Goods Business/ Non Buisness, Tax/ Non Tax
Determine ITC related to non- business/ exempt supply as per following, for each tax period
Life of capital goods = 5 years
ITC (say T1) for tax period = Common ITC/ 60
ITC wrt exempt supply T2 =
Exempt Turnover/ Total turnover * T1
T2 to be added to output tax liability along with interest.
For both Input and Capital Goods
Quantum of ineligible credit to be determined at every time
CGST, SGST, IGST, UT Tax to be determined separately

30. Input Service Distributor
Sec.2(61)- Input Service Distributor-
means office of supplier of Goods or services or both
Receives tax invoices toward receipt of input services
Issues prescribed document for issuing credit of CGST, SGST, UTT, IGST paid on the services
To supplier of Taxable Goods or services or both having same PAN of that office

31. Input Service Distributor
Distribution of Credit ISD Recipient In same state CGST  CGST SGST  SGST IGST  IGST UTGST  UTGST

32. Input Service Distributor
Distribution of Credit ISD Recipient In Different state CGST  IGST SGST  IGST IGST  IGST UTGST  IGST

33. Input Service Distributor
An ISD invoice clearly indicating ‘issued only for distribution of input tax credit’, should be issued by the distributor to the recipient of credit.
The amount of credit distributed shall not exceed the amount of credit available for distribution.
The input tax credit available for distribution in a month shall be distributed in the same month, and the details of the same shall be furnished in Form GSTR -6.
The input tax credit should be distributed only to that branch which has consumed the input services
The credit of tax paid on input services, availed by more than one recipient of credit or all, should be distributed only amongst such recipients or all recipients

34. Input Service Distributor
When the recipient of credit is more than one, distribution of credit shall on pro rata basis on basis of turnover in the state of the recipient to the aggregate turnover of the all recipient during the relevant period.
Relevant period- preceding Financial year or preceding last quarter