Input Tax Credit

“Used or intended to be used in the course or furtherance of Business” Highlights of ITC 1 Availability of ITC on ‘ALL Inward Supplies’ Across the Supply Chain- Manufacturer till it reaches consumer Across the States 2 Furtherance of Business Concept “Used or intended to be used in the course or furtherance of Business”

ITC Claim Possession of Tax Invoice / Debit or Credit Note / Supplementary Invoice issued by a supplier 1 2 The said goods/services have been received 3 Returns have been filed 4 The tax charged has been paid to the government by the supplier 5 Matching of Invoices and Reversal

Technology is the key GST is transaction based technology driven compliance B to B to G to B data exchange through GSTN Triangulation of Business records with GSTN

Outward Supplies Register Ratna Steels Portal Super Cars Ltd Portal Ratna Steels GSTR-1A FORM GST MIS-1 In.No Amt GST Ratna Steels Outward Supplies Register 6 1,00,000 18,000 No Qty Amt GST 6 100 1,00,000 18,000 7 50 50,000 9,000 AUG 20 AUG 15 AUG 16 AUG 11 AUG 10 AUG 21 8 25 25,000 4,500 Super Cars Ltd GSTR-1 10 50 50,000 9,000 Ratna Steels GSTR-1 Tot. 225 2,25,000 40,500 Payment Payment Ratna steels Super Cars Ltd R.J. Automobiles 6 1,00,000 18,000 Inward Supplies Register Books of Super Cars Ltd for July’17 Outward Supplies Register No Qty Amt GST No Qty Amt GST 6 100 1,00,000 18,000 6 100 1,00,000 18,000 6 100 1,00,000 18,000 FORM GST MIS-1 1 80 88,000 15,840 1 80 88,000 15,840 7 50 50,000 9,000 2 60 66,000 11,880 2 60 66,000 11,880 8 25 25,000 4,500 3 30 33,000 5,940 3 30 33,000 5,940 10 50 50,000 9,000 4 45 49,500 8,910 4 45 49,500 8,910 Tot. 225 2,25,000 40,500 6 1,00,000 18,000 Tot. 215 2,36,500 42,570

ITC on Transition to GST

ITC carried forwarded in the Last Return Amount of CENVAT / VAT credit carried forward in a return to be allowed ITC Carried forwarded as per the the Last return Admissible as Input Tax credit in GST All the Returns under existing law are furnished for the last 6 months Liability of Tax on Goods in Transit

Unavailed ITC on capital goods Unavailed cenvat credit and VAT credit on capital goods, not carried forward in a return Current statute, Cenvat and Input Vat is allowed as Input Tax Credit Admissible as Input Tax credit in GST

ITC on Closing Stock Credit of eligible duties and taxes in respect of inputs held in stock to be allowed as ITC A registered taxable person, who was not liable to be registered under the earlier law 1 2 who was engaged in the manufacture or sale of exempted goods 3 First stage dealer or a second stage dealer or a registered importer 4 Switching from Composition Dealer to Regular Dealer

Eligibility Conditions 100% Of ITC The closing stock held must be used or intended to be used for taxable supplies. Passes on the benefit of such credit by way of reduced prices to the recipient You are eligible for input tax credit under GST The date of invoices or any other prescribed duty or tax paying documents must be within 12 months from the date of transitioning to GST The supplier of services is not eligible for any abatement under the Act If you have invoices or any other prescribed duty/ tax paying documents for the closing stock 40 % Of ITC If you do not have invoices or any other prescribed duty/tax paying documents for the closing stock

ITC Entitlement in GST

1 2 3 Business Scenarios Opting for Voluntary Registration Switching from Composition Scheme to Regular 3 Apply for new registration Applied for registration within 30 days from the date on which you become liable to register and Been granted registration

ITC Eligibility- Registration Inputs Capital Goods Input tax credit can be claimed after reducing the tax paid on such capital goods by 5 percentage point per quarter of a year or part thereof from the date of invoice The residual life will be 60 months Inputs Tax Credit on inputs lying in Stock will be eligible

Claim of ITC Make a declaration, electronically in FORM GST ITC-01 furnishing full details input and capital goods In cases where the aggregate value of claim on account of Central, State and Integrated taxes exceeds Rs. 2.0 Lakhs shall be duly certified by a practising chartered accountant or cost accountant.

Apportionment of credit and Blocked credits

Blocked Credit: Negative List Motor vehicles, except when they are supplied in the usual course of business or providing the following taxable services viz., Transportation of passengers, transportation of goods, imparting training on motor driving skills Food and beverages Outdoor catering Beauty treatment Health services LTA Goods and / or services are used primarily for personal use or consumption of any employee Cosmetic and plastic surgery Health services Membership of a club Health and fitness centre Life & Health insurance Goods and services or both received by a taxable person for construction of an immovable property (other than plant or machinery) even if used in the course or furtherance of business 5 Mins Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples Rent-a-cab, life insurance and health insurance – except where Govt. notifies the services which are obligatory for an employer to provide to its employees.

Apportionment and Reversal of credit Partly for Business and non-business purpose Partly for taxable and exempted On Inward supplies covered under Negative List

Manner of Calculation of Eligible ITC Scenario 2 Scenario 1 ITC which are NOT identifiable being exclusively for the purpose of non-business (T1), exclusively for effecting exempt supply (T2) and covered under negative list(T3). In this case, Common Credit (C2) needs to be arrived Attributable ITC identifiable intended to be used exclusively for the purpose of non-business (T1), exclusively for effecting exempt supply (T2) and covered under negative list(T3) Identify the value of ITC which are attributable exclusively for Taxable + Zero Rate Supply. This will be T4 C2 = C1-T4 To determine ineligible credit incase of exempt supply (D1) and non business purpose (D2) Total Credit (T) reduced by tax paid on T1,T2 and T3 will be the eligible credit (C1) D2 = C2 x 5% D1 = (E-F) x C2 E=Exempt Turnover F=Total Turnover C1 = T–(T1+T2+T3) C3=C2-(D1+D2) Eligible common ITC (C3) Eligible ITC will be T4+C3

ITC Reconciliation Before the due date of filing the return for the month of September of the subsequent year, the aggregate amount of D1 and D2 are calculated for year ITC computed in the periodic return found to be lesser than the annual computation will be added to e-liability ledger and interest @ 24% needs to be paid from April of the next FY till the date of payment In case, if the annual computed amount is lesser than periodic return, refund to be claimed by September

Restriction of ITC Entitlement Taxes paid in on Demand - On account of fraud, wilful misstatement or suppression of facts Input tax credit only on receipt of last lot or instalment Filing of September return for the succeeding financial year or filing of annual return for the current financial year whichever is earlier Input tax credit not available for the recipient on payment of advance Non-payment of value of the goods/services and tax to the supplier within 180 days

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