Chapter V Input Tax Credit
36. Documentary requirements and conditions for claiming
input
tax credit.- (1)The input tax credit shall be availed by a registered person, including the Input Service
Distributor, on the basis of any of the following documents, namely,-
(a) an invoice issued by
the supplier of goods or services or both in accordance with the provisions of section 31;
(b) an invoice issued in accordance with the provisions of clause (f) of sub-section
(3)
of section 31, subject to the payment
of tax;
(c) a debit note issued by a
supplier in accordance with the
provisions of section 34; (d) a bill of entry or any similar document
prescribed under the Customs Act, 1962
or
rules made thereunder for
the assessment of integrated tax on imports;
(e) an Input Service Distributor invoice
or Input Service Distributor credit note or
any document issued by an Input Service Distributor in accordance with the
provisions of sub-rule (1) of rule 54.
(2) Input tax credit shall be availed by a registered person only if all the applicable
particulars as specified in the provisions
of Chapter VI 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.
(3) No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance of
any order where any demand
has been confirmed on account of any fraud, willful misstatement or suppression of facts.
37. Reversal
of input
tax
credit
in the case
of non-payment of consideration.-(1) A
registered person, who has availed of input tax credit on any inward supply
of goods or services or both, but fails to pay
to the supplier thereof, the value of such supply along with the
tax payable thereon, within the time limit specified in the second proviso to sub-section
(2) of section 16, shall furnish the details of such supply, the amount of value not paid and
the amount of input tax credit availed of proportionate
to such amount not paid to the supplier in FORM GSTR-2 for the month immediately following the period of one
hundred and eighty days from the date of the issue of the invoice:
Provided that the value of supplies made without consideration as specified
in Schedule I of the
said Act shall be deemed to have been paid for the purposes of the second
proviso to sub-section (2) of section 16.
(2) The amount of input tax credit referred to in sub-rule (1)
shall be added to the output
tax liability of the registered person for the month
in which the details are furnished.
(3) The registered person shall be liable to pay interest
at the rate notified under sub-section
(1) of section
50 for the period starting
from the date of availing
credit on such supplies
till
the date when the amount added
to the output tax liability, as mentioned in sub-rule (2), is paid.
(4) The time limit specified
in sub-section (4) of section 16 shall not apply
to a
claim for re-
availing of any credit, in accordance
with the provisions of the Act or the provisions of this
Chapter, that had been reversed
earlier.
38. Claim of credit by a banking
company or a financial institution.- A banking company or a financial
institution, including a non-banking financial
company, engaged in the supply of services by way of accepting deposits or extending loans or advances that
chooses not to comply with the provisions
of sub-section (2) of section 17, in accordance
with the option permitted under sub-section (4) of that section, shall follow the following
procedure, namely,-
(a)
the
said company or institution shall not avail the credit of,-
(i) the tax paid on inputs and input services that are used for non-business
purposes; and
(ii) the credit attributable to the supplies
specified in sub-section (5) of section 17,
in FORM GSTR-2;
(b) the said company or institution shall avail the credit of tax paid on inputs and input services referred to in the second
proviso to sub-section (4) of section 17 and not covered under clause (a);
(c) fifty per cent. of the remaining
amount of input tax shall be the input tax credit admissible to the company or the institution and 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.
39. Procedure for distribution of
input tax
credit by Input
Service Distributor.- (1)
An Input Service
Distributor shall distribute input tax credit in the manner and
subject to the following conditions, namely,-
(a) the input tax credit available
for distribution in a
month
shall be distributed in the same month and the details thereof shall be furnished
in FORM GSTR-6
in accordance with the provisions of Chapter VIII of these rules;
(b) the Input
Service
Distributor
shall,
in
accordance with the provisions of clause (d), separately distribute the amount of ineligible input tax credit
(ineligible under the provisions of sub-section (5) of section 17 or otherwise) and the amount of eligible input tax credit;
(c) the input tax credit on account of central tax, State tax, Union territory
tax and integrated tax shall be distributed separately in accordance with the provisions of clause (d);
(d) the input tax credit that is required to be distributed in accordance
with the provisions of clause (d) and (e) of sub-section (2) of section
20 to one of the recipients
‘R1’, whether registered or
not, from amongst the total
of all the recipients
to whom input tax credit is attributable, including the recipient(s)
who are engaged in making
exempt supply, or are otherwise
not registered for any reason,
shall be the amount,
“C1”, to be calculated by applying the following formula -
C1 = (t1÷T) × C
where,
“C” is the
amount of credit to be distributed,
“t1” is the turnover, as referred to in section 20, of person R1 during the relevant
period,
and
“T” is the aggregate of the turnover,
during the relevant period,
of all recipients to whom the
input service is attributable in accordance with the provisions of section 20;
(e) the input tax credit on account of integrated tax shall be distributed as input tax
credit of integrated tax to every
recipient;
(f) the input tax credit on account of central tax and State tax or Union territory tax
shall-
(i) in respect of a recipient
located in the same State or Union
territory in which the Input Service
Distributor is located, be distributed as input tax credit of central
tax and State tax or Union territory tax respectively;
(ii) in respect of a recipient located in a State or
Union territory other than that
of the Input Service Distributor, be distributed as integrated tax and
the amount
to be so distributed shall be equal to the aggregate of the amount of
input tax credit of central tax and State tax or Union territory tax that qualifies for distribution to such recipient in
accordance with clause (d);
(g) the Input Service Distributor shall issue an Input Service Distributor invoice, as prescribed in sub-rule (1) of rule 54, clearly
indicating in such invoice
that it is issued only for distribution of input tax credit;
(h) the Input Service
Distributor shall issue an Input Service Distributor credit note, as
prescribed in sub-rule (1) of rule 54, for reduction of credit in case
the
input tax credit already distributed gets
reduced for any reason;
(i) any
additional amount of input tax credit on account of issuance of a debit note to an Input Service Distributor by the supplier shall be distributed in the manner and
subject to the conditions specified in clauses (a) to (f) and the amount attributable
to any recipient shall be calculated in the manner provided in clause
(d) and such credit shall be distributed in the
month in which the debit note is included
in the return in FORM GSTR-6;
(j)
any input tax credit required to
be reduced on account of issuance of a
credit note to the Input Service Distributor by the supplier
shall be apportioned to each recipient in the
same ratio in which the input tax credit contained in the original
invoice was distributed in
terms of clause (d), and the amount so apportioned shall be-
(i) reduced from the amount to be distributed in the month in which the credit
note is included in the return in FORM GSTR-6; or
(ii) added to the output tax liability of the recipient where the amount so
apportioned is in the negative by virtue of the amount of credit
under distribution being
less than the amount to be
adjusted.
(2) If the amount of input tax credit distributed by
an Input Service Distributor
is reduced later on for any other reason for any of the recipients, including that it was distributed
to a wrong recipient by
the Input Service Distributor, the process specified in clause (j) of sub-
rule (1) shall apply,
mutatis mutandis, for reduction
of credit.
(3) Subject to sub-rule (2), the
Input Service Distributor
shall, on the basis of the Input
Service Distributor credit note specified in clause (h) of sub-rule (1), issue an Input Service
Distributor invoice to the recipient
entitled to such credit and include
the Input Service Distributor credit note and the Input Service Distributor invoice in
the return in FORM GSTR-6 for
the month in which such credit note and
invoice was issued.
40. Manner of claiming
credit in special
circumstances.- (1) The input tax credit claimed in accordance with the provisions
of sub-section (1) of section
18 on the inputs held
in stock or inputs contained in semi-finished
or finished goods held in stock,
or the credit claimed on capital goods in accordance
with the provisions
of clauses (c) and (d) of the said
sub-section, shall be subject to the following conditions, namely,-
(a) the input tax credit on capital goods,
in terms of clauses (c) and (d) of sub-section
(1) of section 18, shall be claimed
after reducing the tax paid on such capital goods
by five percentage points per quarter of a year or part thereof from the date of the
invoice or such other documents
on which the capital goods were received by the taxable person.
(b) the registered person shall within a period of thirty
days from the date of his
becoming eligible to avail the input tax credit under sub-section
(1) of section 18 shall make a declaration, electronically, on the common portal in FORM GST ITC-
01 to the effect
that he is eligible to avail the input tax credit as aforesaid;
(c) the declaration under clause (b) shall clearly specify
the
details relating to the
inputs held in stock or inputs contained in semi-finished or finished goods held in stock, or as the case may be, capital goods–
(i) on the day immediately preceding
the date from which he becomes liable
to pay tax under the provisions of the Act, in the case of a claim under
clause (a) of sub-section
(1) of section 18;
(ii) on the day
immediately preceding the date of the grant of registration,
in the case of a claim under clause
(b) of sub-section (1) of section 18;
(iii) on the day immediately preceding
the date from which he becomes liable
to pay tax under section 9, in the case of a claim under clause
(c) of sub-section (1) of section 18;
(iv) on the day immediately preceding the date from which the supplies
made by the registered person becomes taxable, in the case of a claim under clause (d) of sub-section (1) of section 18;
(d) the details furnished in the declaration under clause (b) shall be duly certified
by a practicing chartered accountant or a cost accountant if the aggregate
value
of the claim on account of central tax, State tax, Union territory tax and integrated tax exceeds two lakh rupees;
(e) the input tax credit claimed in accordance
with the provisions of clauses (c) and
(d) of sub-section (1) of section
18 shall be verified with the corresponding details furnished by the corresponding supplier in FORM
GSTR-1 or as the case may be, in FORM GSTR- 4, on the common portal.
(2) The amount of credit in the case of supply of capital goods or plant and machinery, for
the purposes of sub-section (6) of section 18, shall be calculated by reducing the input tax on the said goods at the rate of five percentage points for every
quarter or part thereof from the date of the issue of the invoice
for such goods.
41. Transfer of
credit
on sale, merger, amalgamation, lease or transfer of
a business.- (1) A registered
person shall, in the event of
sale, merger, de-merger,
amalgamation, lease or transfer or change in the ownership of business for any reason,
furnish the details of sale,
merger, de-merger, amalgamation,
lease or transfer of business,
in FORM
GST ITC-02, electronically on the common portal along with a request for transfer of unutilized input tax credit lying in
his electronic credit ledger to the transferee:
Provided that in the case of demerger, the input tax credit shall be apportioned in the ratio of the value
of assets of the new units as specified in the demerger scheme.
(2) The transferor
shall also submit a copy of
a certificate issued by a practicing chartered accountant or cost accountant certifying that the sale, merger,
de-merger, amalgamation,
lease or transfer of business has been done with a specific
provision for the transfer of
liabilities.
(3) The transferee shall, on the common portal, accept the details so furnished
by the transferor and, upon such acceptance, the un-utilized credit specified in FORM
GST ITC-
02 shall be credited
to his electronic credit ledger.
(4) The inputs and capital goods so transferred shall be duly accounted for by the transferee
in his books of account.
42.
Manner
of determination of
input tax credit in respect of inputs or input services
and reversal thereof.-
(1) The input tax credit in respect of inputs or input services, which
attract the provisions of sub-section
(1) or sub-section
(2) of section 17, being partly used
for the purposes of business
and partly for other purposes,
or partly used for effecting taxable supplies including zero rated supplies and partly
for effecting exempt supplies,
shall be attributed to the purposes
of business or for effecting
taxable supplies in the following manner, namely,-
(a) the total input tax involved on inputs and input
services in a
tax period, be denoted as ‘T’;
(b) the amount of input tax, out of ‘T’, attributable to inputs and input services
intended to be used exclusively for the purposes other than business, be denoted
as
‘T1’;
(c) the amount of input tax, out of ‘T’, attributable to inputs and input services intended to be used exclusively for effecting
exempt supplies, be denoted as ‘T2’;
(d) the amount of input tax, out of ‘T’, in respect of inputs and input services on which credit is not available under sub-section (5) of section 17, be denoted as ‘T3’;
(e) the amount of input tax credit credited to the electronic
credit ledger of registered person, be denoted
as ‘C1’
and calculated as-
C1 = T- (T1+T2+T3);
(f) the amount of input tax credit attributable to inputs and input services intended
to be used exclusively
for effecting supplies other than exempted but including zero rated supplies, be denoted as ‘T4’;
(g) ‘T1’, ‘T2’, ‘T3’ and ‘T4’ shall be determined and declared
by the registered person at
the invoice level in FORM GSTR-2;
(h) input tax credit left after attribution of input tax credit under clause (g) shall be
called common credit, be denoted as ‘C2’ and calculated as-
C2 = C1- T4;
(i) the amount of input tax credit attributable towards exempt supplies,
be denoted as
‘D1’ and calculated
as-
where,
D1= (E÷F) × C2
‘E’ is the aggregate
value of exempt supplies during the
tax period, and
‘F’ is
the total turnover in the State of
the registered person during the
tax
period: Provided that where the registered person does not have any turnover during
the said tax period or the
aforesaid information is not available, the value of ‘E/F’ shall be calculated
by
taking values of ‘E’ and ‘F’ of the last tax period
for which the details of such turnover are available,
previous to the month during which the said
value of ‘E/F’ is to be calculated;
Explanation: For the purposes of this clause, it is hereby
clarified that the aggregate
value of exempt supplies and the total turnover shall exclude the amount of any duty
or tax levied under entry
84 of List I of the Seventh Schedule to the Constitution and entry
51 and 54 of List II
of the said Schedule;
(j) the amount of
credit attributable to non-business
purposes if common inputs and
input services are used partly for business
and partly for non-business
purposes, be denoted as ‘D2’, and shall be equal to five per cent. of C2; and
(k) the
remainder of
the common credit shall be the eligible input tax
credit attributed to the purposes of business
and for effecting supplies other than exempted supplies but including zero rated supplies and shall be denoted as ‘C3’, where,-
C3 = C2 - (D1+D2);
(l)
the amount ‘C3’ shall be computed separately
for input tax credit of central tax, State
tax, Union territory tax and integrated tax;
(m) the amount equal to aggregate of ‘D1’ and ‘D2’ shall be
added to the output tax liability of
the registered person:
Provided that where the amount of input tax relating to inputs or input services used partly for the purposes
other than business
and partly for effecting
exempt supplies has been identified
and segregated at the invoice level by the registered person, the same shall be included in ‘T1’ and ‘T2’ respectively, and
the remaining amount of credit on such inputs or input services shall
be included in ‘T4’.
(2) The input tax credit determined under sub-rule (1) shall be calculated finally for the financial year before the due date for furnishing
of the return for the month of September following the end of the financial year to which such credit relates, in the manner specified
in the said sub-rule and-
(a) where the aggregate
of the amounts calculated finally
in respect of ‘D1’ and ‘D2’
exceeds the aggregate of the amounts
determined under sub-rule (1) in respect of ‘D1’ and
‘D2’, such excess shall be added to the output tax liability of the registered person in the month not later than the month of September following
the end of the financial year to
which such credit relates
and the said person shall
be liable to pay interest on
the said excess amount at the rate specified in sub-section
(1) of section 50 for the period starting
from the first day of April of the succeeding financial year till
the date of payment; or
(b) where the aggregate of the amounts
determined under sub-rule (1) in respect of
‘D1’ and ‘D2’ exceeds the aggregate of the amounts calculated finally in respect of ‘D1’ and
‘D2’, such excess amount shall be claimed as credit by the registered person in his return for
a month not later than the month of September following
the end of the financial year to
which such credit
relates.
43. Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain
cases.- (1) Subject to the provisions of sub-section (3) of section 16, the input
tax credit in respect of capital goods, which attract the provisions of sub-sections
(1) and (2) of section 17, being partly used for the purposes of business and partly for other
purposes, or partly used for effecting taxable
supplies including zero rated supplies
and partly for effecting
exempt supplies, shall be attributed
to the purposes of business or for
effecting taxable supplies in the
following manner, namely,-
(a) the amount of input tax in respect of capital goods used or intended to be used
exclusively for non-business purposes or used or intended to be used exclusively
for effecting exempt supplies shall
be indicated in FORM GSTR-2 and shall not be
credited to his electronic credit
ledger;
(b) the amount of input
tax in respect of capital
goods used or intended
to be used exclusively for effecting supplies
other than exempted
supplies but including zero-
rated supplies shall be indicated
in FORM GSTR-2
and shall be credited
to the electronic credit ledger;
(c) the amount of input
tax in respect of capital
goods not covered under clauses
(a) and (b), denoted
as ‘A’, shall be credited to the electronic
credit ledger and the useful life of such goods shall be taken as five years from the date of the invoice
for such goods:
Provided that where any capital goods earlier covered under clause (a) is subsequently covered under this clause, the value of ‘A’ shall be arrived at by
reducing the input tax at the rate of five percentage points for every
quarter or part thereof and the amount
‘A’ shall be credited to the electronic credit ledger;
Explanation.- An item of capital goods declared
under clause (a) on its receipt shall not attract the provisions of sub-section
(4) of section
18, if it is subsequently covered under this clause.
(d) the aggregate of the amounts of ‘A’ credited to the electronic credit ledger
under clause
(c), to be denoted as ‘Tc’, shall be the common credit in respect of capital goods for
a tax period:
Provided that where
any capital goods earlier covered
under clause (b) is subsequently covered under clause (c),
the
value of ‘A’ arrived at by
reducing the input tax at the rate
of five percentage points for
every
quarter or part thereof shall
be added to the
aggregate value ‘Tc’;
(e) the amount of input tax credit attributable to a tax period on common capital goods during their
useful life, be denoted as ‘Tm’ and calculated as-
Tm= Tc÷60
(f) the amount of input tax credit, at the beginning of a tax period, on all common capital goods whose useful life remains
during the tax period, be denoted
as ‘Tr’ and shall be the
aggregate of ‘Tm’
for all such capital goods;
(g) the amount of common credit attributable
towards exempted supplies, be denoted
as ‘Te’, and calculated as-
Te= (E÷ F) x
Tr
where,
‘E’
is the aggregate value of exempt
supplies, made, during the tax period, and
‘F’ is the total turnover of the registered
person during the tax period:
Provided that where the registered person does
not
have any turnover during the said tax period or the
aforesaid information is not available, the value of ‘E/F’ shall be calculated by taking values of ‘E’ and ‘F’ of the last tax period
for which the details of such turnover are available,
previous to the month during which the said
value of ‘E/F’ is to be calculated;
Explanation.- For the purposes of this clause, it is hereby clarified that the aggregate value of
exempt supplies and the total turnover shall exclude
the amount of any duty or tax levied
under entry 84 of List I of the Seventh Schedule
to the Constitution and entry 51 and 54 of
List II of the said Schedule;
(h) the amount Te along with the applicable interest shall, during every tax period
of the useful life of
the concerned capital goods, be added to the output tax liability of the person making such claim
of credit.
(2) The amount Te shall be
computed separately for central
tax,
State tax, Union territory tax and
integrated tax.
44. Manner of reversal of credit under
special circumstances.- (1) The amount of input tax
credit relating to inputs held in stock, inputs contained in semi-finished and finished
goods held in stock, and capital goods
held in stock shall, for the purposes of sub-section
(4) of section 18 or sub-section
(5) of section 29, be determined in the following manner, namely,-
(a) for
inputs held in stock and inputs contained in semi-finished
and finished goods held in stock, the input tax credit shall be calculated proportionately on the basis of the corresponding invoices on which
credit
had
been
availed by the registered taxable person on such inputs;
(b)
for capital goods held in stock, the input tax credit involved
in the remaining useful life in months shall be computed
on pro-rata basis, taking the useful life as five
years.
Illustration:
Capital goods have been in use for 4 years, 6 month
and 15 days.
The useful
remaining life in months= 5 months
ignoring a part of the month
Input
tax credit taken on such capital goods= C
Input
tax credit attributable to remaining useful life= C multiplied by 5/60
(2) The amount,
as specified in sub-rule (1) shall
be determined separately for input tax credit
of integrated tax and central tax.
(2) Where the tax invoices
related to the inputs held in stock are not available, the registered person shall estimate the amount under sub-rule
(1) based
on
the
prevailing market price of the goods on the effective date of the occurrence of any
of the events specified in sub-section (4) of section 18 or, as the case may be, sub-
section (5) of section 29.
(4) The amount
determined under sub-rule (1) shall form part of the output
tax liability of the registered person and the details of the amount shall be furnished
in FORM GST ITC-
03, where such amount relates to any event specified in sub-section
(4) of section 18 and in
FORM GSTR-10, where
such amount relates to the cancellation of registration.
(5) The details furnished in accordance with sub-rule (3) shall be duly certified
by a practicing chartered
accountant or cost accountant.
(6) The amount of input tax credit for the purposes of sub-section
(6) of section 18 relating to capital goods shall be determined in the same manner as specified in clause (b) of sub-
rule (1) and the amount shall be determined separately
for input tax credit of IGST and
CGST:
Provided
that where the amount so determined is more than the tax determined on the transaction value
of the capital goods, the amount
determined shall form part of the output tax liability and
the same shall be furnished in FORM GSTR-1.
45. Conditions and
restrictions in
respect of inputs
and capital goods
sent to the job worker.- (1) The inputs, semi-finished goods or capital goods shall be sent to the job worker under the cover of a challan issued by
the principal, including where such goods are sent directly to a job-worker.
(2) The challan issued by the principal to the
job
worker shall contain the details specified in
rule 55.
(3) The details of
challans in respect
of goods dispatched to a job worker or
received from a job worker or sent from one job worker to another during a quarter
shall be included in
FORM GST ITC-04
furnished for that period
on or before the twenty-fifth day of the month succeeding the said quarter.
(4) Where the inputs or capital goods are
not returned to the principal
within the time stipulated in section 143, it shall be deemed that such inputs or capital goods had
been supplied by the principal to the job worker on the day when the said inputs or capital goods were
sent out and the said supply shall be declared in FORM GSTR-1
and the principal
shall be liable to pay the tax
along with applicable interest.
Explanation.- For
the purposes of this Chapter,-
(1) the expressions “capital goods” shall include “plant and machinery” as defined in
the Explanation to section 17;
(2) for determining the value of an exempt supply as referred to in sub-section (3) of
section 17-
(a) the value of land and building shall be taken as the same as adopted for the
purpose of paying stamp duty; and
(b) the value of security shall be taken as one per cent. of the sale value of such
security.
Posts
0 Comments:
Post a Comment