TMI BlogInput Tax CreditX X X X Extracts X X X X X X X X Extracts X X X X ..... h are used or intended to be used in the course or furtherance of business, subject to other conditions and restrictions. Q 5. What are the conditions necessary for obtaining ITC? Ans. Following four conditions are to be satisfied by the registered taxable person for obtaining ITC: (a) he is in possession of tax invoice or debit note or such other tax paying documents (such as bill of entry or any other document prescribed under the Customs Act, ISD invoice as prescribed in Rule 36(1) of the CGST Rules). (b) he has received the goods or services or both; (c) the supplier has actually paid the tax charged in respect of the supply to the government; and (d) he has furnished the return under section 39. Q 6. Where the goods against an invoice are received in lots or instalments, how will a registered person be entitled to ITC? Ans. The registered person shall be entitled to the credit only upon receipt of the last lot or installment. Q 7. Can a person take input tax credit without payment of consideration for the supply along with tax to the supplier? Ans. Yes, the recipient can take ITC. But he is required to pay the conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of an immovable property (except plant and machinery), telecommunication towers, pipelines laid outside the factory premises, etc. and taxes paid as a result of detection of evasion of taxes. Q 13. A taxable person is in the business of information technology. He buys a motor vehicle for use of his Executive Directors. Can he avail the ITC in respect of GST paid on purchase of such motor vehicle? Ans. No. ITC on motor vehicles can be availed only if the taxable person is in the business of transport of passengers or goods or is providing the services of imparting training on motor vehicles. Q 14. Sometimes goods are destroyed or lost due to various reasons? Can a person take ITC to the extent of such goods? Ans. No, a person cannot take ITC with respect to goods lost, stolen, destroyed or written off. In addition, ITC with respect of goods given as gifts or free samples are also not allowed. Q 15. Can a registered person get ITC with respect of goods or services used for construction of a building for business purposes? Ans. No. ITC on goods or services by a person for construction of immovable property, other than plant and machinery, is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed only in respect of goods or services or both for effecting taxable supplies, would it not lead to loss of input tax credit on exempt supplies when exported? Ans. No. Zero-rated supplies have been covered within taxable supplies for the purpose of allowing input tax credit. Moreover, IGST Act specifically allows availment of input tax credit for making zero rated supplies, notwithstanding that such supply may be exempt. Q 22. Which of the following is included for computation of taxable supplies for the purpose of availing credit? (a) Zero-rated supplies (b) Exempt supplies (c) Both Ans. Zero rated supplies. Q 23. Where goods or services received by a registered person are used partly for the purpose of business and partly for other purposes, whether the input tax credit is available to the person? Ans. The input tax credit of goods or services or both attributable only to the purpose of business can be taken by registered person. The manner of calculation of eligible credit is provided in rules. Q 24. A person paying tax under compounding scheme crosses the compounding threshold and becomes a regular taxable person. Can he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y immediately preceding the date of exercise of option or date of exemption. The ITC on inputs shall be calculated proportionately on the basis of corresponding invoices on which credit had been availed by the registered person on such input. In respect of 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 5 years. Assume capital goods have been in use for 4 years, 6 months and 15 days. The useful remaining life in months will be 5 months ignoring the part of the month. If ITC on such capital goods is taken as C, ITC attributable to the remaining useful life will be C multiplied by 5/60. This would be the amount payable on capital goods. The ITC amount shall be determined separately for integrated tax, central tax and state tax. The payment can be made by debiting electronic credit ledger, if there is sufficient balance in the said ledger, or by debiting electronic cash ledger. If any balance remains in the electronic credit ledger, it would lapse. Q 29. Is there any restriction on period for availment of ITC? Ans. In cases of new registration, change from compos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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