/** * The main template file * * This is the most generic template file in a WordPress theme * and one of the two required files for a theme (the other being style.css). * It is used to display a page when nothing more specific matches a query. * E.g., it puts together the home page when no home.php file exists. * * @link https://developer.wordpress.org/themes/basics/template-hierarchy/ * * @package WordPress * @subpackage Tally * @since 1.0.0 */ ?>
Ever since GST has been discussed across the country, the input tax credit has been spoken about in the same breath. In essence, ITC is the heart and soul of GST. One of the fundamental reasons, why GST is good for the nation, is, the seamless flow of input credit across the chain (right from the manufacture of goods till the end consumer) and across states, which earlier was not the case.
Under the Goods & Service Tax regime, ITC can be availed by every registered taxable person on all inputs used or intended to be used in the course of or for the furtherance of business – be it goods or services. Similarly, ITC will also be available on capital goods used in the course of business, except for a few exceptions.
In order to avail input tax credit under GST, a dealer needs to meet the following conditions –
The following are the situations, in which a taxable person becomes eligible to avail ITC under GST –
When one applies for registration under GST on becoming liable to register, one can avail ITC on inputs and inputs contained in semi-finished or finished goods in stock, on the day before the date on which one becomes liable to pay tax. However, this can happen only if one applies for registration within 30 days from the date on which one becomes liable to register and has been granted registration.
If one voluntarily applies for GST registration, one can avail ITC on inputs and inputs contained in semi-finished or finished goods in stock on the day before one is granted registration.
If one is registered under the composition scheme but the aggregate turnover crosses INR 50 Lakhs, one has to move away from the composition scheme and become a regular dealer. When one leaves the composition scheme and becomes a regular dealer, one can avail ITC on inputs, inputs contained in semi-finished or finished goods in stock, and capital goods on the day before the date on which one becomes liable to pay tax. The credit on capital goods will be reduced by percentage points, which will be notified.
When goods or services declared as exempt from GST are made taxable, one can avail ITC on the following on the day before the supply becomes taxable:
In any of these cases, if there is a specific provision for transfer of liabilities, one can transfer the unutilized ITC to the sold, merged, demerged, amalgamated, leased, or transferred business.
When goods and/or services are used partly for business and partly for other than business purposes, one can avail ITC – but only on the portion used for the purpose of business.
When goods and/or services are used partly for taxable supplies and partly for exempt supplies, one can avail ITC only on the portion used for making taxable supplies and zero rated supplies. ITC is not allowed on the portion used for making exempt supplies, and supplies where the receiver pays tax on reverse charge basis.
When goods are received in lots or instalments, one can avail ITC – but only upon receipt of the last lot or instalment.
ITC on pipelines and telecommunication towers purchased can be availed in instalments – 1/3rd of the total input tax paid can be availed in the financial year of purchase, 2/3rd of the total input tax paid (including credit availed in the previous year) can be availed in the succeeding year, and the balance ITC on any subsequent financial year.
The following are the situations, in which one becomes ineligible to avail ITC under GST –
If one has not applied for registration within 30 days from the date on which one becomes liable to register, one will lose the eligible ITC on inputs and inputs contained in semi-finished or finished goods in stock, on the day before the date on which one becomes liable to pay tax.
ITC must be availed within the earliest of the following dates –
If the recipient has not made payment for supplies received, along with the tax payable within 3 months from the date of invoice, the ITC availed will be added to the recipient's liability, along with interest due.
ITC is not allowed on motor vehicles and other conveyance unless they are:
Other scenarios, such as –
Apart from the above, the GST Input Tax Credit rules also lay down provisions in case of certain exceptional scenarios -
When a regular dealer who has availed ITC switches to the composition scheme, the person must pay back the ITC availed on inputs in stock, inputs in the semi-finished state, finished goods in stock and capital goods (reduced by the prescribed percentage points) on the day before the date of switching to the composition scheme.
When taxable goods and/or services supplied by a person are notified as exempt, the person must pay back the ITC availed on inputs in stock, inputs in semi-finished or finished goods in stock and capital goods (reduced by the prescribed percentage points) on the day before the date of exemption.
Watch Video on What is GST Input Tax Credit?
Know More about ITC
Input Tax Credit Calculator, Reversal of Input Tax Credit, Eligible ITC under GST, GST ITC-04, ITC Utilization in GST
GST Software, GST Calculator, GST Exempted Goods & Services, GST Rates, HSN Codes, SAC Codes, GST State Codes, New GST Returns & Forms, Sahaj GST Returns, Sugam GST Returns
e-Invoice from 1st October 2022 for Businesses with Turnover Exceeding 10 Crore
What is Cloud Accounting Software? How It Works?
Reimagining the Selection List for Delightful Customer Experience
How do you Choose the Right Type of Accounting Software for your Businesses in Kenya?