GST INDIA DAILY

INPUT TAX CREDIT SERIES – PART 8

Last week we have gone through manner of claiming GST. Read the Part 8 of ITC under GST. Please go through the link below

https://wordpress.com/read/blogs/170704436/posts/646

Special circumstances under which ITC is available

• A person who has applied for registration within 30 days of becoming liable for registration is entitled to avail ITC in respect of goods held in stock (inputs as such and inputs contained in semi-finished or finished goods) on the day immediately preceding the date from which he becomes liable to pay tax.

Mr. Raju is carrying on a business and his turnover is below the limit for getting registered under GST authorities. His turnover has increased the specified limit on 15.09.2020 due to which he is liable to get registered under GST Act within 30days. On 15.09.2020 he had stock purchased by him in that financial year amounting to ₹2,00,000 on which he has paid GST of ₹36,000/-. If he gets registered within 30 days from the day when he is liable to get registered, then he can avail the ITC of ₹36,000

• A person who has taken voluntary registration under section 23(3) of the CGST Act, 2017 is entitled to ITC of input tax in respect of goods held in stock (inputs as such and inputs contained in semi-finished or finished goods) on the day, immediately preceding the date of registration.

Mr. Raju has a business which is not liable to get registered under GST Act. However, he intended to get registered voluntarily from 10.11.2020 and on that date he had stock lying amounting to ₹1,50,000 on which he paid GST of ₹27,000. Therefore, Mr. Raju can claim ITC of ₹27,000 on the goods lying on the day preceding the date of registration.

•  A person switching over to normal scheme from composition scheme under section 10 is entitled to ITC in respect of goods held in stock (inputs as such and inputs contained in semi-finished or finished goods) and capital goods on the day immediately preceding the date from which he becomes liable to pay tax as normal taxpayer.

Mr. Raju has opted for composition scheme for FY 201-20 as turnover of his business is under ₹1.5 crores. However, his turnover has exceeded ₹1.5 crores and he decides to switch over to normal scheme from 01.06.2020. On the said date he had inputs on which GST of ₹28,000 has been paid by him and he will be eligible to claim ITC of ₹28,000 once he gets switched over to normal scheme of GST.

• Where an exempt supply of goods or services or both become taxable, the person making such supplies shall be entitled to take ITC in respect of goods held in stock (inputs as such and inputs contained in semi-finished or finished goods) relatable to exempt supplies. He shall also be entitled to take credit on capital goods used exclusively for such exempt supply, subject to reductions for the earlier usage as prescribed in the rules.

Mr. Raju was supplying exempt goods and for making such exempt supplies he has brought various inputs and capital goods on which he has paid GST whereas he cannot avail the same as ITC as he is involved in exempt supply. Now, if the said exempt supply has become taxable from 01.10.2020, then he will be entitled to take ITC in respect of goods related to that exempt supplies. If Mr. Raju has capital goods which were used for making exempt supplies, then he can avail ITC of GST paid on capital goods also from the date when the exempt supply becomes taxable.

It is to be noted that ITC in all the above cases, is to be availed within 1 year from the date of issue of invoice by the supplier.

•  In case of change of constitution of a registered person on account of sale, merger, demerger etc., the unutilised ITC shall be allowed to be transferred to the transferee.

Mr. Raju is carrying on a business and he intends to sell the whole business to Miss. Rani on 12.09.2020 on which he had unutilised ITC lying in his account amounting to ₹1,50,000. On transfer of business to Miss. Rani, Unutilised ITC of ₹1,50,000 will get transferred to her and she can utilise the same thereon.

• A person switching over from composition scheme under section 10 to normal scheme or where a taxable supply become exempt, the ITC availed in respect of goods held in stock (inputs as such and inputs contained in semi-finished or finished goods) as well as capital goods will have to be paid.

Mr. Raju was carrying on business and got registered under normal scheme of GST in FY 2019-20. He decides to opt for composition scheme from 01.04.2020 as he is an eligible person and on the said date he had goods lying in stock amounting to ₹2,00,000 on which he claimed ITC of ₹36,000. Therefore, once he gets switched to composition scheme, he needs to pay ₹36,000 to the department.

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MANIMARAN KATHIRESAN ( ON BEHALF OF GST INDIA DAILY )