INPUT TAX CREDIT UNDER GST

Transcription

1 INPUT TAX CREDIT UNDER GST 1

2 INPUT TAX SCHEME GST on Goods /service Used/intended to be used in the course or furtherance of business Restricted Items ITC 2

3 TAX PAID ON Inputs Capital Goods Input tax Input services 3

4 TAXES ON WHICH CREDIT IS ELIGIBLE IGST, CGST, SGST / UTGST IGST on import of goods or services GST paid on reverse charge basis Tax paid under composition does not qualify as input tax 4

5 RESTRICTED ITEMS a) Motor vehicles / other conveyances: ITC for Motor Vehicles will NOT be available Except when they are used for: Transportation of goods, or Making the following taxable services: i. Further supply of such vehicles/ conveyances, or ii. Transportation of passengers, or iii. Imparting training for driving/ flying/ navigating such vehicles/ conveyances iv. Transportation of goods 5

6 RESTRICTED ITEMS b) Supply of goods and services being: Food and Beverages Outdoor Catering Life/ health Insurance Beauty Treatment Rent-a-cab Govt notifies services obligatory for employer to employees Health Services Cosmetic and Plastic Surgery ITC Not allowed, except when used in outward supply of same category 6

7 RESTRICTED ITEMS No credit shall be allowed for the following services: Membership of club Health and Fitness Centre Travel Benefits to employees

8 RESTRICTED ITEMS c) Works Contract (other than plant & machinery) d) Construction of Immovable Property (other than plant & machinery) Works contract services, Except where it is an input service for further supply of works contract service Goods or services received by a taxable person for construction of an immovable property on his own account including when used in course or furtherance of business; Construction includes reconstruction, renovation, addition or alteration or repairs to the extent of capitalisation. ITC not Available 8

9 Other restrictions e. GST paid under composition scheme under section 10; f. Goods or services or both received by a non-resident taxable person except on goods imported by him; g. Goods or services or both used for personal consumption; h. Goods lost or stolen/ written off/ disposed off by way of gift or free samples; (Gifts to employees beyond Rs.50, 000 is considered as supply- what happens to credit?) i. Tax paid after adjudication where there involves fraud etc. (S. 74) / detention (S.129) / confiscation of goods (S. 130) 9

10 ITC availment & utilisation System for a seamless flow of credit Extends to inter-state supplies Credit utilization u/s 49 would be as follows: CGST and SGST/UTGST cannot be mutually set-off. Tax To be adjusted with IGST 1) IGST 2) CGST 3) SGST CGST 1) CGST 2) IGST SGST 1) SGST 2) IGST UTGST 1) UTGST 2) IGST 10

11 CONDITIONS FOR AVAILMENT Invoice In possession of invoice or other document Receipt Tax Receipt of goods or services [Instalment supply - credit only upon receipt of the last lot/ instalment. Goods deemed to be received by a registered person when the supplier delivers the goods to the recipient/ any other person, on the direction provided by the registered person. Tax payment and filing of returns by supplier 11

12 CONDITIONS FOR AVAILMENT Payment Payment to supplier within 180 days of date of invoice Depreciation No depreciation on credit amount of capital goods Time limit Credit to be availed before filing of return for Sept month of next FY or before filing of annual return (earliest) 12

13 Document on the basis of which credit could be availed Regular supply Reverse charge Price variation import Invoice of supplier Invoice made by recipient Debit note Bill of entry ISD Document issued by ISD 13

14 INPUT TAX CREDIT APPORTIONMENT OF ITC 14

15 Exempt supply NIL rated Exemption Non taxable supplies non-taxable supply means a supply of goods or services which is not leviable to tax under this Act or under IGST Supply to SEZ / SEZ unit or Exports are ZERO rated supplies and not exempt supplies 15

16 S.17 - First apportion partly used for business and partly for other purposes (non-business): Use of input tax credit Attributable to Business purposes Attributable to Other Purposes Credit available Credit not available Formula for apportion is given in Draft ITC Rules 16

17 S.17-Second apportion partly used for taxable supplies and partly for exempted supplies: Use of input tax credit: Partly for Taxable Supplies Zerorated Supplies Nontaxable Supplies Exempt Supplies Nilrated Supplies ITC Availabl e Credit available ITC not availabl e Credit not available Formula for apportion is given in Draft ITC Rules 17

18 Specified input credit - Invoice level segregation Total credit for a period Only on inputs and input services not on capital goods Exclusively used for Credit not eligible Personal purposes Exempted supply Net credit eligible 18

19 Common Credit- apportionment Total credit less specified credits Personal purposes- 5% of the credit Common Credit Exempted supply Proportionate basis Taxable supply Proportionate basis 19

20 Reversal of credit on the basis of turnover To be reversed on the monthly basis using monthly turnovers Re-computation on annual basis within the month of September next FY 20

21 Special provision for banking companies & financial institutions: In the case of banking companies or financial institutions including NBFCs could opt for availment of 50% of the total credit eligible in the tax period. Where the aforesaid banking companies, NBFCs etc opt for availing 50% of total credit eligible, they have to follow the procedure contained in Rule 3 of Input Tax Credit Rules. 21

22 INPUT TAX CREDIT SPECIAL CIRCUMSTANCES 22

23 Eligibility to avail ITC Eligibility of ITC Availment Registered Person 16(1) Applied for registration within 30 days of being liable to register Person applied for Voluntary Registration Registered person ceases to pay composition tax ITC on supplies used/ intended to be used in the course/ furtherance of business ITC available on: a) Inputs b)semi-finished Good c) Finished Goods Same as above Same as above ITC will be credited to the electronic Credit Ledger On the day immediately prior to date on which he is liable to pay tax On the day immediately preceding the date of registration On the day immediately prior to date on which he is liable to pay tax u/s 9 23 O n e Y e a r Ti m e li m it

24 Eligibility to avail ITC-Cap goods Eligibility of ITC Availment Composition regular scheme to Exemption to taxable Capital goods as on the day immediately prior to date of such conversion Same as above Cost less reduction of 5% per Quarter from the date of invoice Same as above 24

25 Transfer of credit due to change in constitution Change in Constitution of Registered Person On account of: Sale, Merger, Demerger, Amalgamation, Lease, or Transfer of business Transferee is allowed to take credit of unutilized ITC 25

26 REVERSAL OF CREDIT Reversal of ITC Regular composition Taxable to Exemption to Reverse credit to the extent of stocks Capital goods as on the day immediately prior to date of such conversion Same as above Capital goods credit based on 5 years useful life Same as above 26

27 Removal of Cap. Goods Removal of Capital goods on which credit is availed Pay higher of below: A) Cost of Cap. Goods less depreciation based on useful life (assumed as 5 years) B) Transaction value Exception for refractory bricks, moulds an dies, jigs and fixtures which are supplied as scrap, then tax has to be paid on tra sa tio alue only. 27

28 Input tax credit on inputs/cg sent for job work Inputs/ Capital Goods sent for job work Principal Received back or directly supplied from job- orker s pre ises ithi 1 ear i puts or 3 years (capital goods) of being sent out Job Worker If not received/directly supplied in time: It is deemed that Principal has supplied the input/capital goods on the day when input / capital goods were sent out. He can reclaim this ITC on receiving back such inputs/ capital goods. Where goods are directly sent to job worker, the period of one year shall be counted from the date of receipt of inputs by the job worker. 28

29 INPUT SERVICE DISTRIBUTOR (61) "Input Service Distributor" means an office of the supplier of goods and / or services which receives tax invoices issued under section 31 towards receipt of input services and issues a prescribed document for the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST paid on the said services to a supplier of taxable goods and / or services having same PAN as that of the office referred to above; 29

30 Input service distributor (Sec 20) ISD shall distribute the credit subject to following conditions: (a) the credit can be distributed to the recipients of credits against a prescribed document; (b) the amount of the credit distributed shall not exceed the amount of credit available for distribution; (c) the credit of tax paid on input services attributable to a recipient shall be distributed only to that recipient; 30

31 Input service distributor (Sec 20) (d) the credit of tax paid on input services attributable to more than one recipient e distri uted o l attri uta le re ipie ts o prorata o the asis of the tur o er i a State or UT of su h re ipie t, during the relevant period, to the aggregate of the turnover of all such recipients to whom such input service is attributable and which are operational in the current year, during the said relevant period. (e) where credit is attributable to all recipients, it shall be distributed amongst such recipients on pro rata basis of turnover in a State or UT of all recipients during the relevant period. 31

32 Explanation to Section 20-definitions (a the rele a t period shall e 1) if the recipients of credit have turnover in their States or Union territories in the financial year preceding the year during which credit is to be distributed, the said financial year; or 2) if some or all recipients of the credit do not have any turnover in their States or Union territories in the financial year preceding the year during which the credit is to be distributed, the last quarter for which details of such turnover of all the recipients are available, previous to the month during which credit is to be distributed; (b the e pressio re ipie t of redit ea s the supplier of goods or services or both having the same Permanent Account Number as that of the Input Service Distributor; 32

33 Recovery of ISD credit Sec 21 When ISD credit is distributed in excess of what is available, it can be recovered with interest in manner specified in section 73 or 74 33

34 Steps in availment and utilisation of credit Avail credit provisionally after receipt of goods and invoice S.41 Supplier to file returns along with supply details and pay taxes S.37 Recipient to file return along with inward details and pay taxes S.38 The credits are correlated with respective supplier returns S. 42 Credits which match to the vendor details are treated as finalised Credits not matched or excess on account of duplication etc. would be treated as tax payable and intimated to the recipient. Vendors also would be intimated about mismatch The said amount of credits not matched would be paid along with interest in the next month Where the vendor rectifies and uploads, to such an extent credit would be allowed and balance shall be payable with interest 34

35 THANK YOU V. RAGHURAMAN, B.Com, FCA, LLB, Grad. CWA, ACS, Advocate