Input Tax Credit

Illustration:

Intra state supply

A B

Let us assume

Value of supply Rs. 10,000

CGST @ 9% Rs. 900
SGST @ 9% Rs. 900

Therefore B Pays Rs. 11,800

Now B C

Value of supply (+20% addition) Rs. 12,000 (on original value)

CGST @ 9% Rs. 1080
SGST @ 9% Rs. 1080

Therefore C pays Rs. 14,160

From the previous case, let us calculate the amount of GST payable by A and B

A’s liability

CGST = 900 SGST = 900

B’s liability

CGST = 1080 SGST = 1080

Less 900 Less 900

180 180
Illustration including both intra state and inter state supply

A B

Let us assume

Value of supply Rs. 10,000

CGST @ 9% Rs. 900
SGST @ 9% Rs. 900

Therefore B Pays Rs. 11,800

Inter-State supply

Now B C

Value of supply (+20% addition) Rs. 12,000 (on original value)

IGST @ 18% Rs. 2,160

Therefore C pays Rs. 14,160

Let us look at the tax liabilities of respective suppliers

A’s liability

CGST = 900 SGST = 900

B’s liability

IGST = 2160
Less: CGST = 900
Less: SGST = 900

Amount Payable = 360

Now let us assume

C D

Value of Supply (12000+20%) = Rs. 14,400

CGST @ 9% = Rs. 1,296
SGST @ 9% = Rs. 1,296

Therefore D pays = Rs. 16,992

Calculation of tax liability

CGST = 1,296 SGST = 1,296

Less = 1,296 Less = 864

= NIL = 432
 Conditions for ITC (Section 16)
• Available to only registered persons for goods or
services purchased in the course or furtherance of
business
• Documents necessary to avail ITC
– Invoice by the supplier
– Debit note (note by supplier when there is a need of increase
in taxable value or increase in GST charged in invoice)
– Bill of entry (Customs)
– Input Service Distributor invoice (document for the purpose
of distributing credit of GST)
• Tax charged has been paid to the Government
already
• Return has been furnished*
• No ITC can be availed in respect of fraudulent
supply
• ITC is not available on Capital Goods on which
depreciation has been claimed under Income
Tax Act 1961
 Time limit
• ITC is available as soon as goods/services are received
• Payment by recipient to supplier must be within 180
days to avail credit
• No ITC can be claimed beyond the due date for
September(following the end of financial year) or
furnishing of relevant annual return- whichever is
earlier.
• If there is no GST on outward supply, no ITC can be
claimed.
 Utilisation
• IGST
– Against IGST
– Remaining against CGST
– Remaining against SGST or UTGST
– Remaining carry forward for next year
– 1st priority
• CGST
– Against CGST then leftover is for next step
– Against IGST
– But not against SGST or UTGST
– Balance carry forward
• SGST/UTGST
– Against SGST/UTGST leftover is used in next step
– Against IGST
– But not against CGST
– Balance carry forward
 Returns
• GSTR – 1 : For reporting details of all outward
supply (monthly)
• GSTR – 2A : Auto generated read only return
based on information provided in GSTR – 1 by
all.
Thank You