TMI BlogITC on pre-operative expenditureX X X X Extracts X X X X X X X X Extracts X X X X ..... Hi May I see expert opinion on availing ITC on pre-operative expenses when the outward supply includes both exempt and taxable. If the Input or Input services relate to exempt or taxable supply specifically, its apparent not to avail or avail ITC appropriately. But challenge comes when common input/input services and capital goods consumed well before commencement of commercial activity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business, how to apply rule 42 or 43 ? Request expert opinion please best regards Durai - Reply By Rajagopalan Ranganathan - The Reply = Sir, Section 16 (1) of CGST Act, 2017 stipulates that every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business Therefore the same rules and restrictions which is applicable to supply of goods and services after commencement of commercial activity of the business, will apply to when common input/input services and capital goods consumed well before commencement of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial activity of the business. This is my view. - Reply By CASusheel Gupta - The Reply = Agree with Rajagopalan Ranganathan ji. GST does not differentiate between pre and post operative supplies. Regards CA Susheel Gupta 8510081001, 9811004443 - Reply By Ganeshan Kalyani - The Reply = The excess credit taken during the year can be paid with interest on or before September month of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subsequent financial year. Hence you may avail the credit now and when the year is over and you have the turover detail you can revise work and take corrective action. - Reply By CS SANJAY MALHOTRA - The Reply = Not starting commercial activity sometimes means trial run on product development taken but no supplies made. In such scenarios, ITC on input and input services are not eligible as n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o supply made. - Reply By KASTURI SETHI - The Reply = Sh.CS Sanjay Malhotra Ji, Sir, Thanks a lot for throwing light on the issue. - Reply By CASusheel Gupta - The Reply = Section 16 allows ITC charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business Supplies pertainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Furtherance of business can be for trial run, advertisement expenses, branding expenses, etc. Further, the ITC is not linked with making of supply. Had it been the case, no one shall be able to take ITC for putting up a factory which takes long time, since during this period no supplies shall be made. Further, as per section 17(5)(h) , ITC is blocked if goods lost, stolen, destroyed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... written off or disposed of by way of gift or free samples . In case of trial run the goods are not disposed of by way of gift or free samples and the ITC is not blocked. CA Susheel Gupta - Reply By CS SANJAY MALHOTRA - The Reply = ITC is linked with supply which is main criteria in GST. Units avail ITC during factory set up considering that they shall be making supply of taxable goods. No on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e avails ITC if they know product is charged to nil GST. - Reply By CASusheel Gupta - The Reply = Respected Sanjay ji Agreed that No one avails ITC if they know product is charged to nil GST. My reply was restricted to that since during trial run there is no supply and in the absence of supply during trial run ITC is not allowed. Regards - Reply By LAKSHMINARAYANAN TR - The Reply = Dear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All Many thanks for your valuable suggestions, interestingly many dimensions have come out in this forum. I would like some details to my original question based on the feedback thread as below We have no trial runs, its a Public Sector undertaking engaged in developing and leasing industrial plots which is their primary supply; also exempted under gst. Side by side, they also develop othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r infrastructure facilities such as effluent treatment, R D lab etc for the investors which may be taxable. At this point, both the development work is underway, most likely they may not start their outward supply until Sep 2018. How would I treat common credit for the purpose of rule 42 ro 43 at this stage? many thanks Durai - ITC on pre-operative expenditure - Query Started By: - L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AKSHMINARAYANAN TR Dated:- 20-4-2018 Goods and Services Tax - GST - Got 9 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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