GST Revisionary Series

CA Intermediate
CA Nishant Kumar
May, 2024
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Lecture 7 – Input Tax Credit

CA Nishant Kumar
Income Tax Revision Schedule
Date Day Topic
01-02-2024 Thursday L1 - Basics of Taxation and General Tax Rates
03-02-2024 Saturday L2 - Residence and Scope of Total Income
06-02-2024 Tuesday L3 - Income from Salaries

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08-02-2024
10-02-2024
13-02-2024
15-02-2024
17-02-2024
Thursday
Saturday
Tuesday
Thursday
Saturday
L4 - Income from House Property
L5 - Profits and Gains from Business or Profession
L6 - Capital Gains
L7 - Income from Other Sources
L8 - Clubbing of Income
20-02-2024 Tuesday L9 - Set Off; Carry Forward of Losses
22-02-2024 Thursday L10 - Deductions from Gross Total Income
02-03-2024 Saturday L11 - Return Filing and Self Assessment
03-03-2024 Sunday L12 - TDS, TCS, Advance Tax
04-03-2024 Monday L13 - Income Tax Liability - Computation and Optimization
GST Revision Schedule
Date Day Topic
05-03-2024 Tuesday L1 - Supply Under GST
07-03-2024 Thursday L2 - Charge Under GST; Composition Levy
11-03-2024 Monday L3 - Place of Supply

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13-03-2024
15-03-2024
18-03-2024
20-03-2024
Wednesday L4 - Exemptions from GST
Friday
Monday
L5 - Time of Supply
L6 - Value of Supply
Wednesday L7 - Input Tax Credit
22-03-2024 Friday L8 - Registration Under GST
25-03-2024 Monday L9 - Tax Invoice; Credit and Debit Notes; E-Way Bill
27-03-2024 Wednesday L10 - Accounts and Records; TDS & TCS
29-03-2024 Friday L11 - Payment of Tax
30-03-2024 Saturday L12 - Returns Under GST
 Chapter 9 – Input Tax Credit
Basics – Process of Availment of ITC
Form Purpose Key Points
GSTR- Filed by the supplier • Monthly filing
1 to detail outward • Details outward supplies of the previous month
supplies • Time limit: 11th of the next month
GSTR- Allows recipient to • Reflects details from GSTR-1 filed by the supplier
2A see supplier's filings • Indicates eligibility for ITC claim on purchases
• Updated in real time
GSTR- Provides a static • Reflects filings of GSTR-1 by supplier within prescribed time
2B view for the (by the 11th)
recipient • Details only purchases eligible for ITC claim
• Static view, reflecting eligible ITC claims for the month
• Example: Purchases made in June, credited only if supplier
filed on time by 11th July. Late filings are credited in the
following month.
GSTR- Monthly return for • Accounts for output liability and ITC
3B the registered • Output liability from sales reduced by eligible ITC (from
person GSTR-2B) and difference paid to government
• Filed by the 20th of the next month
• Example: Invoice raised for services in June with GST of

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Basics – Process of Payment of Tax
₹18,000. ITC of ₹4,500 from timely-filed GSTR-1 reduces
payment to ₹13,500, which is paid along with filing by 20th
July.

Ledger/Process Description Key Points

Electronic Cash Digital wallet on the GST • Deposit amount to be paid from bank
Ledger Portal • Used to pay balance output liability
Electronic Credit Shows the amount of • Automatically credited with ITC
Ledger available ITC amount upon GSTR-3B filing
• Used for payment of output tax
liability
• Balance is NIL after payment
Electronic Liability Reconciliation sheet Shows total output liability, amount paid
Register showing output liability through ITC, and amount paid through cash
details
Process of Payment Steps to pay tax via 1. Identify eligible ITC from GSTR-2B
of Tax Electronic Ledgers 2. Subtract ITC from output liability to
find amount to pay
3. Deposit payment in Electronic Cash
Ledger
4. File GSTR-3B, mentioning output
liability, ITC availed, and cash payment

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 Some Important Definitions
Term Definition
Capital Capital goods means goods, the value of which is capitalized in the books of account of
Goods the person claiming the ITC and which are used or intended to be used in the course or
furtherance of business.
Input Input means any goods other than capital goods used or intended to be used by a
supplier in the course or furtherance of business.
Input Input service means any service used or intended to be used by a supplier in the course
Service or furtherance of business.

Important Questions: Questions 1, 5, 17, 24, 25, 26, 27, 35, 52, 53, 54

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 Section 16: Eligibility for Taking Input Tax Credit (ITC)

Mandatory Requirements [Section 16(1)] Conditions for ITC [Section 16(2)] No ITC If Time Limit for Availing
Depreciation ITC [Section 16(4)]
Claimed
Registration ITC on Subject to ITC ITC ITC based on invoice, debit note, bill of entry, or similar.
under GST inward Section 49 available credited [Section 16(3)]
is supplies provisions for in ITC for a For debit Exception:
Section 16(2)(a) with Rule 36:
mandatory. of goods/ and rules business Electronic Documents must detail tax amount, description, total value, GSTINs, place of supply. financial notes, Time limit
Possession of Tax Paying Document
services conditions/ use or credit year's the does not
is allowed. restrictions. intended ledger. If the GST component is invoices can financial apply
No ITC for fraud, willful misstatement, suppression of facts. be claimed year for when re-
business added to the cost of the
use. asset and depreciation is until Nov ITC claim claiming
ITC on goods/services if details match in GSTR-1/GSTR-2B. claimed thereon, ITC would 30th of the is based credit
Section 49 Section 16(2)(aa) with Rule 36(4): Details of not be available succeeding on the previously
prescribes Supplier and Recipient Should Match financial debit reversed
provisions No ITC if details not furnished by supplier. year or the note's
relating to date of issuance
payment ITC entitlement upon receipt of goods/services. filing the date
of tax, Section 16(2)(b): Receipt of relevant Re-
interest, Goods/Services annual claiming
penalty & "Bill to Ship to" model deemed receipt for credit. return reversed
other ITC due
amounts to
ITC based on GSTR-2B details, subject to eligibility conditions. dispute
resolution
If the supplier is newly registered, there may be a period is not
New bound by
post-registration during which their supplies are ineligible
Registrants the time
for ITC to the recipient.
Section 16(2)(ba): limit

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Details in GSTR-2B
Not Restricted Default
If the supplier has not paid the required taxes for a specified
in Tax
period, ITC cannot be claimed on their supplies.
Payment

Ineligible Output If the supplier's reported tax in GSTR-1/IFF exceeds the paid
conditions Tax tax in GSTR-3B by a certain limit for a tax period, ITC cannot
include Mismatch be claimed.

Excessive If the supplier has claimed ITC exceeding the limit set by GSTR-
ITC 2B during a specified period, ITC cannot be claimed.
Six Provisos
specific If the supplier hasn't met his tax obligations as per section
clauses Tax
49(12) and rule 86B, indicating excessive tax payments from
(a, aa, b, Liability
their electronic credit ledger than allowed, ITC cannot be
ba, c, d) Default First Second Proviso to Section 16(2) Read with Rule 37
claimed.
must be Proviso to
satisfied. Section
Supplier must have paid the tax on goods/services for ITC claim by recipient. 16(2):
Section 16(2)(c): Goods Payment Consequences of Non-payment Exceptions to 180 Days Payment Rule:
Tax Leviable on Received in Timeframe It doesn't apply to:
Tax payment can be in cash or by using ITC from credit ledger. Lots
Supply Actually
Paid
Repay or Amount Pay Action
Registered person can claim ITC based on self-assessment in their return. Registered reverse reversed interest required Supplies Deemed Additions
Subject to person ITC should be on while with tax supplies to supply
ITC
provisions must pay claimed proportionate reversed filing payable without value due
Eligible ITC will be credited to electronic credit ledger. available
of Section the if to unpaid amount GSTR-3B under consideration to recipient
only after
41. supplier for payment supply value under return reverse as per incurring
receipt of
Section 41 read with rule 37A: Reversal and Re-availment of ITC in Case of last lot the goods/ not and tax Section 50 post-180 charge Schedule I supplier’s
Non-payment by Supplier services, made days liabilities
including within as per
tax, within 180 days Section
180 days 15(2)(b)
Reversal of ITC Re-availment of Reversed ITC from the
invoice date

Recipient If If not Failing to If Recipient can

must supplier filed by reverse supplier re-avail ITC
reverse files deadline, ITC pays the once supplier
ITC with GSTR-3B recipient incurs tax later, files GSTR-3B.
interest if by Sept reverses liability recipient
supplier 30, ITC by to pay can re-
doesn't recipient Nov 30. the avail
pay the can claim amount reversed
tax. ITC in with ITC.
GSTR-3B. interest
under
Section
50.

Section 16(2)(d): Filing of Return To claim ITC, GSTR-3B must be filed.

 Section 17: Apportionment of credits and blocked credits

Section Section Section Section 17(5): Blocked Credits Section 17(6): Government Powers
17(1): 17(2): 17(3):
Goods/ Goods/ Value of
ITC generally allowed, except for items in the negative list intended for personal use or related to immovable property (excluding plant and machinery) Government can prescribe the manner of credit attribution
Services Services Exempt
Used Used Supply
Partly Partly 17(5)(a): Motor 17(5)(aa): 17(5)(ab): Leasing/ 17(5)(b): Food & Beverages, Outdoor Catering, 17(5)(c): Works 17(5)(d): Self- 17(5)(e): 17(5)(f): 17(5)(g): 17(5)(h): 17(5)(i):
General Rule
Rule 86A: Restrictions on Utilisation of ITC Rule 86B: Restrictions on the Use of Amount Available
Vehicles Vessels and Services renting/ hiring Health Services, and Other Services Contract Construction Inward Inward Inward Goods lost/ Evasion, in Electronic Credit Ledger
for for Aircrafts Related to of motor Services for of Immovable Supplies Supplies Supplies stolen/ Confiscation,
Includes
Business Taxable supplies under
Ineligible Motor vehicles, vessels Construction of Property Charged to Received Used for destroyed/ etc.
Vehicles, or aircrafts on Immovable Tax Under by a Personal written off First to Then to Assistant If the ITC The However, the

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and and RCM, ITC not allowed Vessels, or which ITC is Food & Membership Travel Property Composition Non- Consumption or disposed Input
be be Commissioner/ has already restriction Commissioner/ Applicability Restriction Exceptions
transactions in for ineligible ITC not allowed, Beverages, of club & benefits to Utilised Utilised Commissioner, or been can be officer
Partly Partly securities, but motor vehicles, except for
Aircrafts disallowed
Outdoor health & employees ITC not
Levy Resident
Taxable
of by way
of gift or ITC not Tax
for the for the
Remarks
any officer above availed by imposed authorised by
Credit
for for not activities/
transactions
except for specific Catering, fitness on vacation allowed, Person free samples available for Payment Payment this rank can the taxable only for a him, can
specific purposes Health Centre (Leave ITC not except in ITC not tax paid due of of restrict the person, period withdraw such Income ITC Refund Cash Specified
Personal Exempt specified in purposes ITC not allowed, Exceptions Services, and Travel available, except specific ITC available to evasion utilisation of ITC then the upto 1 year restriction if he Tax Payments Persons
Schedule III Applies to Only 99% Payment
Purposes Supplies except for
specific
Other Services Concession/
Home Travel
in specific
situations
situations specifically
disallowed ITC not ITC not
or
confiscation
if he feels that officer may from the is satisfied that
registered of the
CGST or ITC has been restrict its date of conditions for
When used for- purposes ITC Concession) allowed, available, CGST or persons Output
SGST/ UTGST fraudulently utilisation imposing imposing the
When used for (i) making (i) When used generally except with certain SGST/ whose Liability
credit can be availed, or that against the such restrictions no If
making taxable further taxable for making an ITC generally not (i) for tax exception UTGST at taxable can be
IGST IGST utilised only the ITC is ineligible liability. restriction. longer exist. received If more Exempts
ITC allowed only ITC allowed only supplies of- supply of such outward taxable not allowed, allowed, (i) WCS for P & M Construction paid on the option supply paid
for the business for the taxable (i) such motor vessel or (i) When supply of the with but when ITC (ii) WCS availed of P & M after credit value through Exemption refund of than 1% government
imported of taxable
portion supplies, vehicles aircraft ineligible motor same category exceptions provided by generally by a works (ii) of IGST is exceeds Electronic for over ₹1 of the departments,
goods person
including zero- (ii) (ii) passenger vehicle, vessel (subcontracting) an employer not contractor for Construction If the fully utilised ₹50 lakh in Credit entities lakh for total PSUs, local
rated supplies transportation transportation or aircraft is or as an to its allowed, further supply of of immovable activity of a month, Ledger; paying unutilized output authorities,
of passengers service used for eligible element of a employees but when WCS property for distribution Circumstances for Imposition excluding Remaining over ₹1 ITC tax and
(iii) imparting (iii) imparting purposes taxable (i) Where a under a provided by [Subcontracting] others of gifts or CGST credit exempt and 1% to be lakh in related to liability in statutory
training on training on (ii) When composite or particular statutory an employer (iii) Where value (iii) Value of free can be zero-rated paid in income tax zero- the bodies
driving such navigating/ received by mixed supply. category of obligation, to its of WCS is not construction is samples utilised only supplies Cash. in the last rated current
CGST CGST IGST ITC availed based on tax Registered Registered two years supplies FY has
ineligible flying such manufacturer of (ii) When such inward it is allowed employees capitalized not capitalised falls within after all
motor vehicle vessel/aircraft ineligible motor provided by an supplies is under a the scope credit of IGST invoices/valid documents from: person person (includes or been paid
(iv) vehicle, vessel employer to its used for statutory of "supply" is utilised availing ITC availing registered inverted in cash
transportation or aircraft employees under making an obligation, as per is non- ITC lacks person, duty
of goods (iii) When statutory outward it is allowed Schedule I existent or tax Karta, structure
Note: received by a obligation taxable supply of the said non- without where tax not invoice/ proprietor,
SGST/ UTGST
Ineligible General of the same Act, ITC is existent receipt not paid to conducting valid managing
credit can be
Motor vehicle Insurance category - allowed. supplier or of the any document directors,
P & M means apparatus, equipment, utilised only Tax
means motor service provider [Sub- one not goods Government business partners,
& machinery fixed to earth by after all liability
vehicle for in respect of contracting] conducting or from the directors,
foundation or structural supports credit of IGST under
transportatio such ineligible or as an business services registered committee
but excludes land, building/ other is utilised. reverse
n of persons motor vehicle, element of a from the place members,
civil structures, telecommunication Besides this charge
with seating vessel, or taxable registered trustees)
towers, and pipelines laid outside the SGST/ SGST/ SGST/ UTGST mechanis
capacity of aircraft insured composite or IGST place
factory premises. UTGST UTGST credit can be m is not
≤13 persons by it mixed supply utilised for counted
(including (ii) When payment of towards
driver) provided by an IGST only the total
employer to after the ITC output
its employees of CGST has liability
under a been utilized for this
statutory fully. exception
obligation
 Section 18: Credit in Special Circumstances

Section 18(1)/(2) read with Rule 40: ITC Section 18(4) Read with Rule 44: Switching from Normal Section 18(6) read with Section 18(3) read with Rule 41A: Transfer of ITC on
Availment for Newly Registered Persons and Scheme to Composition Scheme or Exiting from GST Rule 40(2) and Rule 44(6): Rule 41: Transfer of ITC Obtaining Separate
Time Limit Amount Payable on Supply on Account of Change in Registrations for Multiple
of Capital Goods or Plant Constitution of Places of Business Within a
Exiting from GST Cancellation of Registration
and Machinery on Which Registered Person State/Union Territory
ITC Has Been Taken
Section 18(4) mandates the reversal of Input Tax Credit (ITC) for registered Reversal Comparison Separation Addition
persons switching schemes or for supplies becoming wholly exempt of ITC with of ITC to Allows Includes In case of demerger,
Output Tax Reversal Output transfer of change in ITC is divided based
Tax Pay Higher of: Specific Items unutilized ownership on asset value Allows separate Enables transfer of
Liability ITC due to due to registrations for unused ITC to newly
Same business death of multiple business registered locations
Reversal of ITC on Inputs Reversal of ITC as at Reversed ITC locations within based on their asset
changes sole
on Capital Goods the ITC reversal the same state/UT value
(sale, proprietor
time amount is on inputs The ITC Tax on the If refractory merger,
of compared and reversal Asset value
Invoice Invoice Not Available taken, transaction bricks, etc.) if
Exiting with the capital amount is includes all
Available Pro-rata Part of If a Capital reduced value. moulds and liabilities
output tax goods is added to business assets,
basis the Goods is by 5% for dies, jigs and are also
payable, calculated the regardless of ITC
reversal month used for 5 every fixtures are transferred Asset value considers
and the separately registered claims
Reversal Certification based on is years, 6 quarter supplied as all owned assets,
Reversal Based on required higher of for CGST, person's or part scrap, the
the ignored months, regardless of ITC
Based Prevailing from CA/ the two is SGST/ output thereof taxable
remaining and 15 claims
on Market Cost paid UTGST, tax from the person may
useful life, days,
Invoice Price Accountant and IGST liability invoice pay tax on
considered ignore 15 Note
as 5 years days, date. the
consider transaction

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only 5 value Note
years and 6 Requires Transferee Transferee
months, FORM GST must must
which ITC-02 accept record
Compute Requires submission Upon acceptance,
would submission details on transferred
ITC for of necessary unused ITC is
leave 6 and a common inputs and
the information on the credited to the
months as certificate portal to capital
remaining government portal electronic credit
remaining from a credit ITC goods in
useful life within 30 days of ledger of the new
life. practicing to their their books
separately registration locations
Reverse Chartered/ ledger
for CGST,
the crediit Cost
SGST/
accordingly. Accountant
UTGST,
and IGST.

Electronic credit or cash ledger must be debited with reversal amount

for stock and capital goods on the day before switching or exemption.
Any remaining ITC in the electronic credit ledger will lapse.

Note

When a This It must be Additionally, if

registered declaratio filed the total ITC
individual n should within 30 claim across
becomes include days from CGST,
eligible to claim details of eligibility, SGST/UTGST, and
Input Tax inputs, a period IGST exceeds
Credit (ITC), semi- extendable ₹2,00,000, the
they must finished or by relevant declaration needs
submit an finished tax certification from
electronic goods in authorities. a practicing
declaration in stock, and Chartered
FORM GST ITC- capital Accountant or
01 via the goods as Cost Accountant.
common portal specified