1. Provisions & Rules Relating to Input Tax Credit
Presentation By CA. Shailendra Jain
M/s. Shah Baheti Chandak & Co.

2. INPUT TAX CREDIT
Input Tax Credit to be given only to a registered person.
Subject to such conditions/restrictions as may be prescribed.
In the manner specified in Section 49.
Only of input tax charged on supply of goods/services or both
Such goods/services both to be used or intended to be used in the course or furtherance of business.

3. CREDIT OF INPUT TAX IS NOT TO BE ALLOWED UNLESS
The claimant is in possession of tax invoice or debit note issued by a supplier registered under CGST Act.
He has received the goods/services or both.
Where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person whether acting as an agent or otherwise before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise.
Subject to provisions of Section 41, tax charged in r/o such supply has actually paid to the Govt. either in cash or by utilization of Input Tax Credit and
He has furnished return U/s 39.

4. INPUT TAX CREDIT
Where goods or services against an invoice are received in lot or installments the registered person shall take credit upon receipt of last lot or installment.
Where recipient fails to pay to the supplier of goods/services or both (except under reverse charge) the amount of the value of supply along with tax within 180 days from the date of invoice, the ITC claimed shall be added to the output liability along with interest. However, the recipient can claim the credit on payment mode by him of the amount of supply with tax payable thereon.

5. INPUT TAX CREDIT
Eg. A obtained supplies from B for Net Rs.1,000/- + Tax Rs.50/- vide invoice dtd and received the goods same day. He however, makes the payment Net of Rs.500/- + Tax Rs.25/- on & balance on to B. How ITC credit will be availed by A.
On receipt of invoice & goods on he is entitled to claim ITC at Rs.50/-
Since he failed to pay Rs.1,050/- to B by i.e. on 180 days he will have to pay Rs.50/- + interest for 180 days on When he makes payment of Rs.525/- to B on , he can claim credit of Rs.25/-. Similarly balance credit of Rs.25/- can be claimed on when he pay Rs.525/- to his supplier i.e B.

6. INPUT TAX CREDIT
Where depreciation on the tax component of cost of capital goods and plant & machinery under I.T. Act, input tax credit on the said tax component is not allowable.
Input tax credit in r/o any invoice or debit note or both cannot be claimed after due date of furnishing of returns U/s 39 for September following the financial year to which such invoice or invoice relating to debit note pertain or furnishing of relevant annual return whichever is earlier.

7. APPOINTMENT OF CREDIT & BLOCKED CREDIT1.
Goods, Services or both used partly for business partly for other purposes
Credit to be restricted to the input tax attributed to business purpose 2.
Goods, Services or both used partly for effecting taxable services (including zero rated supplies) under this Act or under IGST Act and partly for exempt supplies under the said Act.
Credit to be restricted to so much of Input Tax as is attributed to taxable supplies (including zero rated supply)
The value of exempt supply shall be such as may be prescribed & shall include supplies on which recipient is liable to pay tax under reverse charge, transactions in securities, sale of land and subject to clause (b) of Para 5 of s Schedule V sale of building

8. to avail proportionate credit or
SPECIAL PROVISIONS FOR BANKING CO OR
FINANCIAL INSTITUTIONS (INCLUDING NBFC)
Option is given
to avail proportionate credit or
Avail 50% of the eligible credit on inputs, capital goods and input services and rest shall lapse.
The option once exercised will have to be followed during remaining part of the financial year.
Restriction of 50% not to apply to tax paid on supplies made by one registered person to another registered person having the same PAN.

9. NETAGIVE LIST ITC not available in r/o following :-
Motor vehicle & other conveyance except when they are used.
(i) For further supply of such vehicle or conveyances; or
(ii) Transportation of passengers or
(iii) Imparting training on driving flying navigating such vehicles or conveyances
(iv) For transportation of goods.
The following supplies of goods or services or both
(i) Food & Beverages, outdoor catering, beauty treatment, health services, cosmetic & plastic surgery except where inward supply of goods/services or both of a particular category is used for making an outward taxable supply of the same category of goods /services or both or as an element of taxable composite or mixed supply.

10. NETAGIVE LIST
(ii) Membership of a club, health & fitness centre (iii) Rent a cab ,life insurance and health insurance except where- (A) Govt. notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force. (B) Such inward supply of goods/services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods/services or both or as part of a taxable composite or mixed supply and (iv) Travel benefits extended to employees on leave such as leave or home travel concession.

11. NETAGIVE LIST
Works contract services when supplied for construction of an immovable property (other than Plant & Machinery) except where it is an input service for further supply of works contract service.
Goods/services or both received by a taxable person for construction of an immovable property (other than Plant & Machinery) on his own account including when they are used in the course or furtherance of business)
‘Construction’ to include reconstruction, renovation, addition or alteration or repairs, to the extent of capitalization, to the said immovable property.
Goods or services or both on which tax is paid U/s 10 (Composition)
Goods/services or both received by NTP except on goods imported by him.
Goods/services/both used for personal consumption
Goods lost/stolen/ destroyed/written off or disposed off by way of gift or free samples.
Tax paid under provisions of Section 74 (fraud, willful, suppression/ detention seizure of goods conveyance

12. Plant and machinery :- means apparatus, equipment and machinery fixed earth by foundation or structural suggest that are used for making outward supply of goods/ services or both and includes such foundation and structural support but excludes.
(i) Land, building or any other civil structures
(ii) Tele-communication towers, and
(iii) Pipelines laid outside the factory premises

13. Credit in special Circumstances
Subject to such conditions and restriction as may be prescribed :-
(a) A person who applied for registration within 30 days from the date on which liability to register owners is given such registration – entitled to take credit of input tax in r/o input held in stock, input contained in semi finished goods /finished goods held in stock on the day immediately proceeding the date of liability
(b) Persons taking registration u/s 25(3) (voluntary registration) is entitled to take credit of input tax in r/o inputs held in stock/ input contained in semi-finished/ finished goods held in stock in the day immediately preceding the date of grant of registration.

14. Credit in special Circumstances
(c) Where a person ceases to pay tax u/s 10, he is entitled take credit of input tax in r/o input held in stock/ input contained in finished goods/ finished goods and on capital goods on the day immediately preceding the date from which he become liable to pay tax u/s 9.

15. However credit on capital goods shall be reduced by such /
parts as may be prescribed
(d) When exempt supply of goods/ services or both by a registered a person becomes taxable, such person shall be entitled to take credit of input tax in r/o input held in stock/ input in semi-finished goods/ finished goods relative to exempt supply and capital goods exclusively for such exempt supply on the day immediately preceding the date on which supply becomes taxable. However, credit of capital goods should be reduced by such % points as may be prescribed. Further no credit in above cases will be admissible in r/o any supply of goods/ service or both after expiry of one year from the date of issue of tax invoice relating to such supply.

16. In case of change of constitution of a registered person due to merges, demerges, amalgamation, lease or transfer of business with liabilities the unutilized credit can be transferred to the transferee.
In case of a person who availed input tax credit opts to pay tax U/s 10 or where the goods/ services or both become wholly exempt, he should pay an amount by way of debit in cash ledger/ credit ledger, equal to the credit of input tax in r/o input held in stock/contained in semi finished goods/finished goods/capital goods on exercising such option . Credit on capital goods to be reduced by such % points as may be prescribed.

17. In case of supply of capital goods or plant and machinery on which ITC is taken, the registered person shall pay an amount equal to ITC taken as reduced by such % points as may be prescribed or tax on the transaction value of capital goods or plants and machinery as may be prescribed.
Incase of refractory bricks, moulds, dies, jigs and fixtures are supplied as scrap, taxable person may pay tax on transaction value of such capital goods or plant and machinery determined u/s 15 which ever is higher.

18. PROVISIONAL ITC
Input tax credit can be taken on provisional basis as assessed in the return & it will be credited to assessee’s electronic ledger

19. MATCHING, REVERSAL & RECLAIM OF ITC
The details of inward supplies furnished by a R.P. for a tax period is to be matched :-
(a) With corresponding details of outward supplies furnished by his suppliers, in his valid return for the tax period or any preceding tax period.
(b) With IGST paid U/s 3 of the Customs Tariff Act.
Claim of ITC in r/o invoices or debit notes that match with the corresponding outward supply or IGST paid U/s 3 of the Customs Tariff Act on imports shall be finally accepted.
In case of mismatch the same is to be reported to both such persons.

20. MATCHING, REVERSAL & RECLAIM OF ITC
Duplication of ITC claim will be communicated to claimant
If the discrepancy is not rectified by the supplier in the valid return for the month in which discrepancy is communicated will be added to output tax liability of the recipient in return for next month.
In case of duplication it will be added to the output liability in the same month in which duplication is communicated.
The amount so added can be reduced from output tax liability of the supplier dealers the details of invoice or debit note in his valid return for due date of furnishing return for the month of September or before due date of filing annual return i.e. 31st December which ever is earlier.

21. MATCHING, REVERSAL & RECLAIM OF ITC
The amount added on account of mismatch or duplication is to pay interest form the date of availing credit till corresponding additions.
If reduction in output tax liability is accepted the interest paid is refunded by credit in the electronic ledger.

22. JOBWORK AND ITC
(1) Principal is eligible to claim credit for inputs sent to a Job worker for Job work. (2) Principal can claim ITC on inputs sent for Job work even if inputs are directly sent to a Job worker. (3) If the inputs are received by the principal after completion of Job work or otherwise or supplies from Job worker’s place within a period of one year of being sent out, it will be supply in the hands of principal on the day inputs were sent. The period of one year to be counted from the date of receipts by the job worker where inputs were sent to him directly.

23. JOBWORK AND ITC
(4) Principal also eligible to claims ITC on capital goods sent to a Job worker for Job work. (5) Principal can claim ITC on capital goods sent directly to the Job worker for Job work. (6) If the capital goods are not received back by the principal within three years of being sent out, it shall be deemed to be a supply by principal to the Job worker on the date of being sent out. Three years to be granted from the date of receipt by the worker where it was sent directly. The provision of receiving back will not apply to moulds, Dies, Jigs and Fixtures or Tools sent to a Job worker.

24. DISTRIBUTION OF ITC BY ISD
ISD should distribute Central Tax or Integrated Tax as integrated tax or Central Tax by issue of a document containing amount of ITC being distributed.
The ISD may distribute the credit subject to following conditions :-
a) Credit can be distributed to the recipient of credit against a document containing such details as prescribed.
b) Credit distributed shall not exceed amount of credit available for distribution.

25. DISTRIBUTION OF ITC BY ISD
c) Credit of tax paid on input service attributed to a recipient of credit shall be distributed only to that recipient d) Credit of tax paid an Input Service attributed to more than one recipient shall be distributed amongst such recipient prorata on the basis of turnover in a state of such recipient during the relevant period to the aggregate turnover of all recipient to whom ISD is attributable and which are operational in current year.

26. DISTRIBUTION OF ITC BY ISD
e) Credit on tax paid on Input Service attributable to all recipient service shall be distributed amongst such recipient prorata on the basis of turnover in a state of such recipient during the relevant period to the aggregate of turnover of all recipient which are operational in current year during such relevant period. The relevant period means financial year preceding the year during which credit is to be distributed if the recipient of the credit have turnover in their state if some or all recipient do not have any turnover in preceding financial year the last quarter for which the details of such turnover of all the recipient which available, previous to the month during which credit is to be distributed.

27. DISTRIBUTION OF ITC BY ISD
ISD can distribute ITC subject to following conditions
a) ITC available in a month to be distributed in the same month.
b) ISD to separately distribute ineligible ITC and eligible ITC
c) ITC on account of Central Tax, State Tax and Integrated Tax to be distributed separately.
d) ITC required to be distributed to one of the recipients from among the total of all the recipients shall be calculated applying the following formula
C1=t1/TXC
where C=amount of credit to be distributed
t 1 = Turnover of the recipient during relevant period
T= Aggregate turnover during the relevant period, of all recipient .

28. DISTRIBUTION OF ITC BY ISD
ITC on account of integrated tax to be distributed as input tax credit of integrated tax.
ITC on account Central tax and State tax shall
a) to a recipient located in same State in which ISD is located be distributed as ITC of Central tax and State tax.
b) in respect of a recipient located in a State other than that of ISD be distributed as integrated tax and the amount shall be equal to amount of ITC of Central tax and State tax.
c) ISD to issue and ISD invoice clearly indicating that such invoice is issued only for distribution of ITC.

29. DOCUMENTS FOR ITC
The tax credit shall be available to a registered person including ISD on the basis of following documents
An invoice issued by the supplies of goods/services or both in accordance the provisions of Section 31;
The debit note issued by a supplier in accordance with provisions of Section 34;
A bill of entry;
An invoice issued in accordance with the provisions of Clause (f) of sub Section (3) of Section 31 (on purchases form un registered person);
A document issued by an input services distributor in accordance with the provisions of sub Rule (1) of Rule 7 of GST Invoice Rules;
A document issued by an input services distributor as prescribed in Clause (g) of sub rule (1) of Rules 4 (clearly indicate in such invoice that it is issued only for distribution of input tax credit)

30. CALCULATION OF ITC
A is in business of providing taxable & non taxable supplier
Total ‘Input Tax’
17,000/-
Input tax related to non business purpose
1,000/-
Input tax related to supplies lost in fire
1,500/-
Input tax related wholly to taxable supplies
4,500/-
Exempt supplies
30,000/-
Supplies on which tax is paid
60,000/-
Exports
10,000/-
Calculate admissible Input Tax Credit

31. CALCULATION OF ITC Credit Not Admissible Credit Admissible Fully
Related to Non business purpose
1,000/-
Wholly attributable to taxable supplies 4,500/-
Related to items not eligible
(destroyed in fire)
1,500/-
Pro-rata credit
TOTAL
2,500/-
Calculation of Input tax relating to taxable and exempt supplies
Total Input Tax
17,000/-
(-) Not admissible
14,500/-
(-) Admissible as wholly attributable to taxable supplies
4,500/-
Common to taxable/taxfree supplies
10,000/-

32. Proportionate Credit Admissible
= Common ITC
= 10,000/-
= 7,000/-
Taxable Supplies X
Total Supplies
(60, ,000/-
1,00,000/-
70,000 /-
Total ITC = Rs.4,500/- + Rs.7,000/-
= Rs.11,500/-

33. THANK YOU!