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Input Tax Credit under GST

Goods and Services Tax - GST - By: - Surabhi Bohra - Dated:- 2-12-2017 - Goods and Service Tax (GST) in India provides for seamless and continuous flow of input tax credit (ITC). In the earlier tax regime, cascading of tax is significant due to non-availability of ITC at various stages. Credit of taxes like CST, Entry Tax, and Luxury Tax was not available which became cost of the goods/services. Credit of VAT was not available to manufacturers and service providers and CENVAT credit and credit o .....

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inter-State transactions. Moreover, credit of GST paid on import of goods/services would also be available. 1. Eligibility of Input Tax Credit The credit availability under GST is thus more liberal as compared to the earlier indirect system. A registered person can avail the credit of input tax charged on supplies of goods/services made to him if the underlying supplies are used or intended in course or furtherance of business. ITC to be credited to his electronic credit ledger. ITC can be avail .....

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ST · CGST · IGST SGST · SGST · IGST UTGST · UTGST · IGST 3. Conditions for claiming ITC ITC can be claimed by the registered person (RP) if all the following conditions are satisfied:- a. RP possesses tax invoice/debit note/other taxpaying document, issued by a registered supplier; b. Goods/services shall have been received by him. If goods are delivered on his direction [Bill to ship to scenario] to a third person it would be deemed to have been receive .....

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d to the output liability of the recipient. The recipient will be entitled to ITC when payment is made by him. d. GSTR-3 shall have been furnished by RP. e. ITC on capital goods or plant machinery can be claimed only if depreciation on the tax component has not been claimed under the Income Tax Act, 1961. 4. Timeline for claiming ITC: ITC shall be claimed at anytime earlier of the following:- a. 20th of October of the following financial year(FY) to which the tax invoice pertains to (due date fo .....

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TR-9. 5. Restriction on claiming ITC ITC to the extent of taxes paid on goods and / or services used partly for the purpose of any business for other purposes shall be permitted to the extent of ITC attributable to purpose of business. ITC to the extent of taxes paid on goods and / or services is used for taxable supplies including zero rated supplies and partly for exempted [1] supplies shall be permitted only to the extent they are used in taxable supplies and zero-rated supplies only. Banking .....

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ption exercised in one month will be applicable throughout the financial year. [1] Exempt supplies to include supplies on which recipient pays tax under reverse charge, transactions in securities, sale of land/building. 6. Comparative View Particulars Existing Tax Laws GST Regime Time limit for claiming ITC  Up to 1 year from the date of issue of Invoice. Earlier of-  Return of September of the following F.Y.  Filing of Annual Return. Time Limit for payment Input service .....

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Electronic Credit Ledger · No such concept · ECRL required to be maintained for crediting and utilizing ITC. Reversal of Credit · Reversal of ITC provided for in certain circumstances. · No such concept. Cases demanding reversal to be added to the output GST. Payment to Appropriate Government ·Credit claim and utilization not dependent upon payment of tax by the supplier. · ITC claim dependent upon payment of tax by the supplier. Failure to do so disent .....

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y treatment, health services, club membership, health and fitness centre, rent a cab, life/health insurance, travel benefits etc. d. Works contract services when supplied for construction of an immovable property (other than plant3 and machinery) except where it is an input service for further supply of works contract service; e. Goods/services or both received for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or bo .....

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uctures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. f. Tax paid under Composition levy; g. Supply made by a non-resident taxable person except on goods imported by him; h. Supply of goods/service for personal consumption; i. Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; j. Any tax paid in accordance with the provisions of sections 74, 129 and 130 8. Matching of ITC: The matching, claim, reversal and reclaim of .....

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