1. Input credit and Transitional provisions
Goods & Services Tax
Input credit and Transitional provisions
V. Raghuraman

2. TRANSITIONAL PROVISIONS
Transitional provisions under model GST law could be broadly categorised as below:
Registration and migration to the new law
Input tax credit
Refunds pending or to be filed under existing law
Adjudications or appeal under the existing law
Miscellaneous other issues
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3. Registration
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4. Section 139- Migration of existing taxpayers to GST
In terms of Section 139 person who is registered under any of the current laws relating to Excise/Service Tax/ VAT, having a valid PAN shall be granted a provisional registration under the GST regime
The final certificate of registration shall be granted in such form and manner and subject to such conditions as may be prescribed
If a person (who is registered under present statute) is not required to register under the provisions of Section 22 /24 CGST Act, in such case it is deemed that no provisional registration is issued.
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5. Input tax
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6. Section 140(1)-Tax credit based on returns filed under earlier laws
A registered person [other than a person who wish to pay GST under composition scheme] would be entitled to avail input tax credit of taxes (Excise/ST) carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished, by him under the earlier law. The procedure for the same would be prescribed.
Credit shall not be allowed unless
such credit is also admissible under the GST Act. (How do we match credit to inputs?)
he has furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date
said amount of credit does not relates to goods manufactured and cleared under such exemption notifications as are notified by the Government
Similar provisions under Section 18(1) of UTGST Act2017 to transfer the VAT and entry tax credit
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7. Section 140(2)-Unavailed cenvat credit on capital goods
Unavailed credit of duty / tax on capital goods (not carried forward in return) under earlier laws could be availed as credit under GST law (capital goods as defined under CCR,2004).
It appears from the provision that if you had forgotten to take the credit, the entire credit can be taken under the GST regime.
Person shall not be allowed to take credit unless the said amount was admissible as cenvat credit under the earlier law and is also admissible as input tax credit under this Act
Similar provisions relating to availment of unavailed credit of capital goods under state VAT laws is also provided.
How do we match credits to stock of capital goods?
Similar provisions under Section 18(2) of UTGST Act2017 to avail VAT credit on capital goods.
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8. Section 140(3) - Credit on goods in stock as on the appointed date
Applicability
A registered taxable person (under GST), who was not liable to be registered under the earlier law or
who was engaged in the manufacture of exempted goods or provision of exempted services under the earlier law,
Providing works contract services and was availing of the benefit of notification No. 26/2012-Service Tax, dated
First/Second stage dealer or registered importer or depot of manufacturer
They shall be entitled to take credit of eligible duties and taxes in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day.
A registered taxable person, other than a manufacturer or a supplier of services, is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, then such registered taxable person shall take credit in the manner prescribed.
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9. Section 140(3) - Credit on goods in stock as on the appointed date
Conditions:
such inputs and / or goods are used or intended to be used for making taxable supplies under GST Act, 2017;
the said taxable person is eligible for input tax credit on such inputs under this Act;
(iii) the said taxable person is in possession of invoice and/or other prescribed documents evidencing payment of duty under the earlier law in respect of such inputs;
(iv) such invoices and /or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and
(v) the supplier of services is not eligible for any abatement under the GST Act
Similar provisions under Section 18(3) of UTGST Act2017 to enable availment of credit of VAT and entry tax credit. This provision also covers the cases of credit on stock of goods which the second /subsequent sales were not liable to tax under VAT laws
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10. Similar provisions under Section 18(4) of UTGST Act 2017
Sections 140(4)- person having taxable as well as exempted activities
Manufacturer – manufacturing both dutiable as well as exempted
Service provider- providing both taxable as well as exempted services
Credit relating to taxable service/ dutiable goods- based on the final return [Section 140(1)]
Credit relating to exempted activities : to the extent of credit relating to stock [Section 140(3)]
Where they are liable to pay tax under GST.
Similar provisions under Section 18(4) of UTGST Act 2017
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11. Sections 140(5)- Inputs/ input services received on or after appointed day
Credit of duties and taxes paid under earlier law on the goods or services/ document received after appointed date could be availed if the document is received or accounted in books within 30 days of appointed date or such period as extended by the competent authority. What about capital goods credit?
The registered taxable person may have to submit a statement in the form and manner which would be prescribed in the due course.
Similar provisions under Section 18(5) of UTGST Act2017 to transfer the VAT and entry tax credit
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12. Section 140(6): Person paying tax under composition scheme / standard rate under present scheme
A Person under composition scheme / similar schemes under current tax laws could take credit under GST scheme of taxes on inputs, semi finished goods and Finished goods in stock. The conditions are as below:
such inputs or goods are used or intended to be used for making taxable supplies under this Act;
the said registered person is not paying tax under section 10;
(iii) the said registered person is eligible for input tax credit on such inputs under this Act;
(iv) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of inputs; and
(v) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day
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13. Section 140(7)- ISD
The input tax credit on account of any services received prior to the appointed day by an Input Service Distributor shall be eligible for distribution as credit under GST Act even if the invoice(s) relating to such services is received on or after the appointed day.
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14. Section 140(8)-Provision for transfer of unutilized Cenvat Credit by taxable person having centralized registration under the earlier law
Where a taxable person having centralized registration under the earlier law has obtained a registration under this Act, such person shall be allowed to take, in his electronic credit ledger, credit of the amount of cenvat credit carried forward in a return, furnished under the earlier law by him, in respect of the period ending with the day immediately preceding the appointed day in such manner as may be prescribed.
Where the taxable person files his return for the period ending with the day immediately preceding the appointed day within 3 months of the appointed day, such credit shall be allowed subject to the condition that the said return is either an original return or a revised return where the credit has been reduced from that claimed earlier
The taxable person shall not be allowed to take credit unless the said amount admissible as input tax credit under this Act:
Such credit may be transferred to any of the registered taxable persons having the same PAN for which the centralized registration was obtained under the earlier law.
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15. Section 140(9)-Reversal of input service credit on account of non payment
Where any CENVAT credit availed for the input services provided under the existing law has been reversed due to non-payment of the consideration within a period of three months, such credit can be reclaimed subject to the condition that the registered person has made the payment of the consideration for that supply of services within a period of three months from the appointed day
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16. Section 140-Explanation 1 - What are the “eligible duties and taxes” means-
( pertaining to certain sub sections) the duty of excise
Additional Duties of Excise (Textile and Textile Articles) Act, 1978 (40 of 1978);
the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957(58 of 1957);
the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001(14 of 2001);
the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975 (51 of 1975);
the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975 (51 of 1975); and
the service tax leviable under section 66B of the Finance Act, 1994 (32 of 1994) [only for the purpose of Section 140(5)]
in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day
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17. Procedures : Draft Rules
To file FORM GST TRAN-1, within 60days from appointed date
For capital goods credit [Ref sec. 140(2)]- following details shall be submitted:
(i) the amount of tax or duty availed or utilized by way of input tax credit under each of the existing laws till the appointed day, and
(ii) the amount of duty or tax yet to be availed or utilized by way of input tax credit under each of the existing laws till the appointed day;
Where the credit availment relates stock of inputs/ Semi Finished goods/ Finished goods, details of stock on appointed day shall be submitted
For credit of goods / services received after the appointed day, following information shall be submitted:
(i) the name of the supplier, serial number and date of issue of the invoice by the supplier or any document on the basis of which credit of input tax was admissible under the existing law,
(ii) the description, quantity and value of the goods or services
(iii) the amount of eligible taxes and duties or, as the case may be, the value added tax [or entry tax] charged by the supplier in respect of the goods or services,
(iv) the date on which the receipt of goods or services is entered in the books of account of the recipient.
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18. Procedures : Draft Rules
Availment of transitional credit in terms of Sec. 140(3), where no documents are not in possession of the registered person:
Such credit shall be allowed at the rate of [forty per cent.] of the central tax applicable on supply of such goods after the appointed date and shall be credited after the central tax payable on such supply has been paid.
The scheme shall be available for six tax periods from the appointed date.
(b) Such credit of central tax shall be availed subject to satisfying the following conditions, namely,-
(i) Such goods were not wholly exempt from duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 or were not nil rated.
(ii) Document for procurement of such goods is available with the registered person.
(iii) Registered person availing this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2) of rule 1, submits a statement in FORM GST TRAN--- at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period.
(iv) The amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal.
(v) The stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person
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19. Section 141: Transitional provisions relating to Job work
Goods (inputs, Semi finished goods and finished goods) removed for job work or other operations prior to appointed date:
Whether received back within 6 months from appointed date
NO GST shall be payable
Period of 6 months could be extended where sufficient cause is shown
If goods are not received back
Credit availed by the sender is recovered as arrears of tax and no credit shall be eligible
The finished goods may also be cleared directly from job workers premises on payment of GST or without GST for export or deemed export.
It shall be noted that to avail this benefit , inputs held by job worker on behalf of principle manufacturer shall have to be declared.
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20. Sec 142(1): Goods returned to the place of business on or after the appointed day
Where any goods (on which duty/ tax is paid) and which are taxable under GST are cleared under current law (clearance shall be within 6 months prior to appointed date) are returned to the supplier within 6 months from appointed date, if returned by person not registered no GST shall be payable on such return of goods and the duty / tax already paid would be refunded. In any other case, person returning shall have to pay GST if he is registered, otherwise by the recipient.
Similar provisions Similar provisions under Section 20(1) of UTGST Act2017
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21. Section 142(2) Price revision after appointed date
Contract was entered prior to appointed date
Supply of goods or service or both prior to appointed date
Price revision after appointed date:
Upward price revision: issue supplementary invoice within 30days of such price revision and shall be treated as suppl. invoice relating taxable GST supply
Downward revision: issue credit note within 30days of such price revision and shall be treated as credit note relating taxable GST supply. Reduction in tax liability would be allowed only where buyer has reduced his credit.
Similar provisions under Section 20(2) of UTGST Act2017 to transfer the VAT and entry tax credit
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22. Refund
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23. Section 142(3) Pending refund claims or refund of taxes paid under earlier law to be disposed of under earlier law
Every claim for refund of any duty/tax and interest, if any, paid on such duty/tax or any other amount, filed by any person before or after the appointed date.
Such claim shall be disposed of in accordance with the provisions of earlier law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of earlier law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 (1 of 1944)
where any claim for refund of tax/cenvat credit is fully or partially rejected, the amount so rejected shall lapse.
where the refund claim is made after the appointed, no refund claim shall be allowed of any amount of Cenvat credit where the balance of the said amount as on the appointed day has been carried forward.
Similar provisions under Section 20(3) of UTGST Act 2017 relating to refund of input tax credit
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24. Section 142(4) Pending refund claims or refund of tax paid on export of goods or services
Every claim for refund filed after the appointed day, of any duty/tax paid on export of goods or services before or after the appointed date.
Such claim shall be disposed of in accordance with the provisions of earlier law
where any claim for refund of tax/cenvat credit is fully or partially rejected, the amount so rejected shall lapse.
where the refund claim is made after the appointed, no refund claim shall be allowed of any amount of Cenvat credit where the balance of the said amount as on the appointed day has been carried forward.
Similar provisions under Section 20(4) of UTGST Act 2017 relating to refund of tax relating to exports
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25. Section 142(5)Refund claims filed after the appointed day for payments received and tax deposited before the appointed day in respect of services not provided
Every claim for refund of any tax paid under earlier but no services are provided on such duty/tax or any other amount, filed by any person after the appointed date, shall be disposed of in accordance with the provisions of earlier law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of earlier law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 (1 of 1944):
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26. ADJUDICATION & APPEALS
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27. Section 142(6) Claim of cenvat credit to be disposed of under the earlier law
Any appeal, revision, review or reference relating to a claim for CENVAT credit / input tax shall be disposed off under the provisions of the current law applicable and
if credit is eligible same shall be refunded in cash to assessee subject to section 11B(2). However, no refund is eligible where balance of credit is carried forward to GST scheme
If not eligible to be recovered as arrears of tax under GST.- No credit of such arrears of tax would be eligible as credit under GST
Similar provisions under Section 20(5) of UTGST Act 2017 relating to refund of input tax credit
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28. Section 142(7) demand of duty or tax to be disposed of under the earlier law
Any appeal, revision, review or reference relating to a claim for output tax shall be disposed off under the provisions of the current law applicable and
If recoverable , to be recovered as arrears of tax under GST.- No credit of such arrears of tax would be eligible as credit under GS
if not recoverable same shall be refunded in cash to assessee subject to section 11B(2). However, no refund is eligible where balance of credit is carried forward to GST scheme
Similar provisions under Section 20(6) of UTGST Act 2017 relating to refund of input tax credit
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29. Finalization of proceedings relating to output duty liability
Proceeding of appeal, revision, review or reference relating to any output duty liability initiated before the appointed day, shall be disposed of in accordance with the provisions of the earlier law,
and if any amount becomes recoverable as a result of such appeal, revision, review or reference, the same shall be recovered as an arrear of tax under this Act and amount so recovered shall not be admissible as input tax credit under this Act.
Where any amount is found admissible to assessee, same shall be refunded in cash subject to sec 11B(2).
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30. Section 142(8)- Treatment of the amount recovered or refunded in pursuance of assessment or adjudication proceedings
Where in pursuance of an assessment or adjudication proceedings instituted, whether before or after the appointed day, under the earlier law, any amount of tax, interest, fine or penalty becomes recoverable from the taxable person, the same shall be recovered as an arrear of tax under GST Act and the amount so recovered shall not be admissible as input tax credit under this Act
Where in pursuance of an assessment or adjudication proceedings instituted, whether before or after the appointed day, under the earlier law, any amount of tax, interest, fine or penalty becomes refundable to the taxable person, the same shall be refunded to him in cash under the earlier law, notwithstanding anything to the contrary contained in the said law other than the provisions of
sub-section (2) of section 11B of the Central Excise Act, 1944.
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31. Section 142(9)- Treatment of the amount recovered or refunded pursuant to revision of returns
(1) Where any return, furnished under the earlier law, is revised and if, pursuant to such revision, any amount is found to be recoverable from the taxable person or credit is found to be inadmissible, the same shall be recovered as an arrear of tax under this Act (if not recovered under the existing law ) and the amount so recovered shall not be admissible as input tax credit under this Act. 9
(2) Where any return, furnished under the earlier law, is revised and if, pursuant to such revision, any amount is found to be refundable to any taxable
person, the same shall be refunded to him in cash under the earlier law, notwithstanding anything to the contrary contained in the said law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944.
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32. Miscellaneous other issues
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33. Section 142(10) Treatment of long term construction / works contracts
The goods and/or services supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of this Act.
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34. Section 142(11) -
Notwithstanding anything contained in Time of supply [section 12 and 13], no tax shall be payable on the supply of goods and/or services made on or after the appointed day where tax was leviable on any supply both under the Value Added Tax Act and under Chapter V of the Finance Act, 1994, tax shall be leviable under this Act and the taxable person shall be entitled to take credit of value added tax or service tax paid under the existing law to the extent of supplies made after the appointed day and such credit shall be calculated in such manner as may be prescribed.
Where however tax is actually paid under both the enactments but supply is made under GST, tax is payable and credit can be taken for the tax already paid.
V. Raghuraman

35. Sec. 142(12)- Goods sent on approval basis returned on or after the appointed Day
Goods sent on approval basis [not earlier than 6 months prior to appointed date], sent back to the seller within 6 months from appointed date- no GST liable to be paid
Period of 6 months could be extended by competent authority on sufficient cause by another 2 months
If sent back after 6 months (or extended period) tax shall be payable subject to taxability of goods, both by sender as well as recipient.

36. Sec. 142(13)- Tax deduction at source
Where a supplier has made any sale of goods in respect of which tax was required to be deducted at source under the earlier law and has also issued an invoice for the same before the appointed day, no deduction of tax at source under GST law [under section 51 ]shall be made by the deductor under the said section where payment to the said supplier is made on or after the appointed day.
V. Raghuraman

37. Transitional provisions under IGST law [21 of IGST law]
Notwithstanding the provisions relating to time of supply [section 12 and 13 of the CGST Act, 2016] import of services made after the appointed day shall be liable to tax under the provisions of IGST law regardless of whether the transactions for such import of services had been initiated before the appointed day. If however tax is paid under earlier law, balance amount of tax is payable under this act.
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38. CREDIT MECHANISM

39. DEFINITION OF CAPITAL GOODS, INPUTS AND INPUT SERVICES
Section 2
(19) “capital goods” means: goods, the value of which is capitalised in the books of accounts of the person claiming the credit and which are used or intended to be used in the course or furtherance of business
(59) “input” means any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business
(53) “input service” means any service used or intended to be used by a supplier in the course or furtherance of business;
(61) “Input Service Distributor” means an office of the supplier of goods or
services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office

40. (a) the integrated goods and services tax charged on import of goods;
INPUT TAX
(62) “input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes—
(a) the integrated goods and services tax charged on import of goods;
(b) The tax payable under reverse charge basis in terms of
(i) Section 9 of CGST Act
(ii) Section 5 of IGST Act
(iii) Section 9 of SGST /UTGST Act
but does not include the tax paid under the composition levy;
(63) “input tax credit” means the credit of input tax;

41. Business Vertical
(18) “business vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business verticals.
Explanation.––For the purposes of this clause, factors that should be considered in determining whether goods or services are related include––
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of regulatory environment (wherever applicable), including
banking, insurance, or public utilities;

42. Manner of taking credit Section 16
Credit availment on provisional basis (Section 41)
Credit could availed subject to following conditions:
In possession of document to avail credit
Received goods / services
Tax has been actually paid to the Government
Has furnished returns
In case of goods or services, if payment is not made to supplier within 180 days from the date of issue of invoice, an amount equal to credit so availed to be paid as output tax with interest
No credit to the extent of depreciation (under IT Act) claimed on tax amount
Time limit for taking credit (upper limit) earliest of the following:
Date of filing of return for the month of September in next Financial Year
Date of filing of Annual return for the relevant current FY

43. Motor Vehicles / other conveyances except when used for
Apportionment of credit and blocked credits
Section 17
Where goods or services or both are used both for taxable and non taxable (excluding zero rated supplies such as exports) / business and non business– proportionate credit to be availed. conditions, restrictions and manner of computation would be prescribed;
Banking companies could opt for availment of 50% of the total credit eligible in the tax period
Restriction on credit availment on:
Motor Vehicles / other conveyances except when used for
Further supply of such vehicles
Transportation of passengers
Imparting training on driving etc.
Transportation of goods
b) goods and / or services provided in relation to food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, except for making such outward supply;
c) membership of a club, health and fitness centre,

44. Blocked credits
Section 17
d) Rent a cab, life insurance, health insurance except where government notifies the services which are obligatory for employer to provide to its employees
e) and travel benefits extended to employees on vacation such as leave or home travel concession
f) Works contract services / goods/services used for construction of immovable property other than plant and machinery. WC / goods could be availed for provision of WC services or for plant and machinery.
(g) GST paid under composition scheme under section 10; and
(h) goods and/or services used for private or personal consumption, to the extent they are so consumed.
Goods lost or stolen/ written off/ disposed off by way of free sample or gift etc.
(j) Tax paid after adjudication where there involves fraud etc./ detention / confiscation of goods
Plant and machinery defined under the Act.

45. credit under special circum stances Section 18
Voluntary Registration: credit of tax on goods in stock immediately day prior to registration could be availed
Registration after crossing exemption limit : Credit of tax on goods in stock immediately day prior to registration could be availed subject to following conditions:
Applied for registration within 30 days from the date on which he is required to obtain registration;
Registration has been granted.
A registered person, who ceases to be person liable to pay under composition and pays under normal scheme – Credit on input tax contained in stock, semi-finished goods or finished goods as on the date of such conversion could be availed - conditions and restrictions would be prescribed
Exempt supply becomes taxable supply: credit of tax on goods in stock immediately day prior to supply becomes taxable could be availed
No credit shall be availed after one year from the date of invoice for those categories mentioned above.

46. Manner of taking credit
Section 18
Change in constitution of taxable person: transfer of credit to the new firm/ company etc., permissible subject to conditions and procedure
On switching from regular scheme to composition scheme, or where goods or services becomes exempt absolutely, then credit relating to inputs, inputs contained in FG and SFG as on switching date or exemption date shall be reversed by debit to credit or cash ledger. Balance credit if any shall lapse
Supply of used capital goods : amount equal to tax credit less prescribed percentage points or tax on transaction value whichever is higher to be paid
Provisions to recover wrongly taken credit.

47. Steps in availment and utilisation of credit – Section 42
Avail credit provisionally after receipt of goods / service and invoice
Supplier to file returns along with supply details and pay taxes
Recipient to file return along with inward details and pay taxes
The credits are correlated with respective supplier returns
Credits which match to the vendor details are treated as finalised
Credits not matched or excess on account of duplication etc. would be treated as tax payable and intimated to the recipient. Vendors also would be intimated about mismatch
The said amount of credits not matched should be paid along with interest in the next month
Where the vendor rectifies and uploads, to such an extent credit would be allowed and balance shall be payable with interest

48. Job Work Section 19 read with Section
Principal could claim input tax credit on inputs or capital goods where the inputs or capital goods sent to job worker or directly delivered by vendor to job worker.
Principal is the person who is responsible for accountability of goods and payment of tax.
The said inputs after processing shall have to be returned within 1 year from date of supply. Capital goods shall have to returned within 3 years from the date of supply. Job worked goods could also be supplied directly from job workers premises on payment of tax or without payment of tax for exports
If not received back/ supplied further, within time prescribed, treated as supply on the date of initial movement of goods and tax along with interest to be paid

49. Input service distributor (Sec 20)
ISD may distribute, the credit of CGST as IGST and IGST as IGST, by way of issue of a prescribed document containing, inter alia, the amount of input tax credit being distributed
(3) The Input Service Distributor may distribute the credit subject to the following
conditions, namely:
(a) the credit can be distributed to the recipients of credit against a document
containing such details as may be prescribed;
(b) the amount of the credit distributed shall not exceed the amount of credit
available for distribution;
(c) the credit of tax paid on input services attributable to a recipient of credit shall
be distributed only to that recipient;

50. (d) the credit of tax paid on input services attributable to more than one recipient
of credit shall be distributed amongst such recipients to whom the input service is
attributable and such distribution shall be pro rata on the basis of the turnover in a
State or turnover in a Union territory of such recipient, during the relevant period, to
the aggregate of the turnover of all such recipients to whom such input service is attributable and which are operational in the current year, during the said relevant period;
(e) the credit of tax paid on input services attributable to all recipients of credit
shall be distributed amongst such recipients and such distribution shall be pro rata on the basis of the turnover in a State or turnover in a Union territory of such recipient, during the relevant period, to the aggregate of the turnover of all recipients and which are operational in the current year, during the said relevant period.

51. ISD credit Sec 19 Explanation.––For the purposes of this section,––
(a) the “relevant period” shall be––
(i) if the recipients of credit have turnover in their States or Union territories in the financial year preceding the year during which credit is to be distributed, the said financial year; or
(ii) if some or all recipients of the credit do not have any turnover in their States or Union territories in the financial year preceding the year during which the credit is to be distributed, the last quarter for which
details of such turnover of all the recipients are available, previous to the month during which credit is to be distributed;
(b) the expression “recipient of credit” means the supplier of goods or services or both having the same Permanent Account Number as that of the Input Service Distributor;
(c) the term ‘‘turnover’’, in relation to any registered person engaged in the supply of taxable goods as well as goods not taxable under this Act, means the value of turnover, reduced by the amount of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution and entries 51 and 54 of List II of the said Schedule.

52. Recovery of ISD credit Sec 20
When ISD credit is distributed in excess of what is available, it can be recovered with interest in manner specified in section 73&74

53. Credit under IGST law-
Credit mechanism(availment, adjustment, matching etc.) as prescribed under CGST law to be followed
Where credit of IGST is utilised for payment of CGST or SGST, amount equal to such credit utilised shall be transferred from IGST account to CGST / SGST account by the Central Government

54. Manner of utilisation of Credit
Credit of
Manner / sequence of utilisation for payment of
1st Preference
2nd preference
Balance if any
IGST
CGST
SGST/UTGST
Cannot utilised for SGST payment
SGST
Cannot utilised for CGST /UTGST payment
UTSGT
UTGST
Cannot utilised for CGST payment
Balance if any in the electronic credit ledger shall be refunded.

55. Input tax –Draft Rules- Rule 1
Documents on the basis of which credit could be availed
Invoice, Debit / credit note issued by supplier
Bill of entry
Invoice raised for receipt of goods from unregistered dealer [Sec.31(4)(f)]
Document issued by ISD
Input tax credit shall be availed by a registered person only if all the applicable particulars as prescribed in Chapter ---- (Invoice Rules) are contained in the said document, and the relevant information, as contained in the said document, is furnished in FORM GSTR-2 by such person
No tax credit of amounts paid in pursuance of any order where any demand has been raised on account of any fraud, willful misstatement or suppression of facts

56. Input tax –Draft Rules
Rule 2: Reversal of input tax credit in case of non-payment of consideration:
To be reported in GSTR for the month following the month in which the period of 180days expires
Rule 3: Claim of credit by a banking company or a financial institution opting to avail 50% of the credit:
(a) Such assessee shall not avail the credit of inward supplies that are used for non-business purposes and the ineligible credits covered in section 17(5), in FORM GSTR-2;
(b)(c) 50% eligible credit is admissible to the said assessee shall be furnished in FORM GSTR-2;
(d) the amount referred to in clauses (b) and (c) shall, subject to the provisions of sections 41, 42 and 43, be credited to the electronic credit ledger of the said company or the institution.

57. Input tax –Draft Rules
Rule 4 deals with Procedure for distribution of input tax credit by Input Service Distributor
Credit to be distributed on the basis of proportionate turnovers.
If Distribution within State >> SGST/IGST/CGST shall be distributed respectively under the said headings only
If distributed outside the state>>> distribution as IGST
Rule 5 deals with the procedure for availment of credit specified in Section 18 [during the period of registration, exempt supplies becoming taxable etc.]
Rule 6 provides for procedure for transfer of credit on account of sale, merger, amalgamation, lease or transfer of a business
Rule 7 prescribes manner of determination of input tax credit and reversal thereof where the credit is partly used for business and not business purposes or in taxable and non taxable supplies

58. Input tax –Draft Rules
Rule 8 prescribes manner of determination of tax credit on capital goods and reversal thereof where the credit is partly used for business and not business purposes or in taxable and non taxable supplies
Rule 9 prescribes manner of determination of amount of tax credit to be reversed on account of taxable supplies becoming exempt or the assessee opting for composition scheme
Rule 10 prescribes conditions and restriction in respect of inputs and capital goods sent to the job worker

59. Thank You
V. Raghuraman