TMI BlogInput Tax Credit Mechanism in GSTX X X X Extracts X X X X X X X X Extracts X X X X ..... t concurrently. As the tax charged by the Central or the State Governments would be part of the same tax regime, credit of tax paid at every stage would be available as set-off for payment of tax at every subsequent stage. Let us understand how cascading of taxes takes place in the present regime. Central excise duty charged on inputs used for manufacture of final product can be availed as credit for payment of Central Excise Duty on the final product. For example, to manufacture a pen, the manufacturer requires, plastic granules, refill tube, metal clip, etc. All these inputs are chargeable to central excise duty. Once a pen is manufactured by using these inputs, the pen is also chargeable to central excise duty. Let us assume tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under a single levy. The major taxes/levies which are going to be clubbed together or subsumed in the GST regime are as under: Central Taxes State Taxes Central Excise duty Additional duties of excise Excise duty levied under Medicinal Toilets Preparation Act Additional duties of customs (CVD SAD) Service Tax Surcharges Cesses State VAT / Sales Tax Central Sales Tax Purchase Tax Entertainment Tax (other than those levied by local bodies) Luxury Tax Entry Tax (All forms) Taxes on lottery, betting gambling Surcharges Cesses GST comprises of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods or services or both which is used or intended to be used in the course or furtherance of business. b) The pre-requisites for availing credit by registered person are: a) He is in possession of tax invoice or any other specified tax paying document. b) He has received the goods or services. Bill to ship scenarios also included. c) Tax is actually paid by the supplier. d) He has furnished the return. e) If the inputs are received in lots, he will be eligible to avail the credit only when the last lot of the inputs is received. f) He should pay the supplier the value of the goods or services along with the tax within 180 days from the date of issue of invoice, failing which the amount of credit availe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c and plastic surgery, except under specified circumstances; ii. membership of a club, health and fitness center; iii. Rent-a-cab, life insurance, health insurance except where it is obligatory for an employer under any law; iv. travel benefits extended to employees on vacation such as leave or home travel concession; a) Works contract services when supplied for construction of immovable property, other than plant machinery, except where it is an input service for further supply of works contract; b) Goods or services received by a taxable person for construction of immovable property on his own account, other than plant machinery, even when used in course or furtherance of business; c) goods and/or services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. e) ITC, in all the above cases, is to be availed within 1 year from the date of issue of invoice by the supplier f) 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. g) A person switching over from composition scheme under section 10to normal scheme or where a taxable supply become exempt, the ITC availed i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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