CHAPTER V INPUT TAX CREDIT 16. Manner of taking input tax credit (1) Every registered taxable person shall, subject...
CHAPTER
V
INPUT
TAX CREDIT
16. Manner of
taking input tax credit
(1)
Every
registered taxable person shall, subject to such conditions and restrictions as
may be prescribed and within the time and manner specified in section 35, be
entitled to take credit of input tax admissible to him and the said amount
shall be credited to the electronic credit ledger of such person.
(2) A person who has applied for registration
under the Act within thirty days from the date on which he becomes liable to
registration and has been granted such registration shall, subject to such
conditions and restrictions as may be prescribed, be entitled to take credit of
input tax in respect of inputs held in stock and inputs contained in
semi-finished or finished goods held in stock on the day immediately preceding
the date from which he becomes liable to pay tax under the provisions of this
Act.
(2A) A person, who takes registration under sub-section (3) of section
19, shall, subject to such conditions and restrictions as may be prescribed, be
entitled to take credit of input tax in respect of inputs held in stock and
inputs contained in semi-finished or finished goods held in stock on the day immediately
preceding the date of registration.
(3) Where any registered taxable person
ceases to pay tax under section 8, he shall, subject to such conditions and
restrictions as may be prescribed, be entitled to take credit of input tax in
respect of inputs held in stock and inputs contained in semi-finished or
finished goods held in stock on the day immediately preceding the date from
which he becomes liable to pay tax under section 7.
(3A) A taxable
person shall not be entitled to take input tax credit under sub-section (2),
(2A) or sub-section (3)in respect of any
supply of goods and / or services to him after the expiry of one year from the
date of issue of tax invoice relating to such supply.
(4) The amount of credit under sub-section
(2), (2A) or sub-section (3) shall be calculated in accordance with generally
accepted accounting principles in such manner as may be prescribed.
(5) Where the goods and/or services are used
by the registered taxable person partly for the purpose of any business and
partly for other purposes, the amount of credit shall be restricted to so much
of the input tax as is attributable to the purposes of his business.
(6) Where the goods and / or services are
used by the registered taxable person partly for effecting taxable supplies and
partly for effecting non-taxable supplies, including exempt supplies but
excluding zero-rated supplies, the amount of credit shall be restricted to so
much of the input tax as is attributable to the taxable supplies including
zero-rated supplies.
(7) The Central or a State Government may, by
notification issued in this behalf, prescribe the manner in which the credit
referred to in sub-sections (5) and (6) above may be attributed.
(8) Where there is a change in the
constitution of a registered taxable person on account of sale, merger,
demerger, amalgamation, lease or transfer of the business with the specific
provision for transfer of liabilities, the said registered taxable person shall
be
allowed to transfer the input tax credit that remains unutilized in
its books of accounts to such sold, merged, demerged, amalgamated, leased or
transferred business in the manner prescribed.
(9) Notwithstanding anything contained in
sub-section (1), (2), (2A) or (3) input tax credit shall not be available in
respect of the following:
(a) motor vehicles, except when they are
supplied in the usual course of business or are used for providing the
following taxable services—
(i) transportation of passengers, or (ii)
transportation of goods, or
(iii) imparting
training on motor driving skills;
(b) goods and / or services provided in
relation to food and beverages, outdoor catering, beauty treatment, health
services, cosmetic and plastic surgery, membership of a club, health and
fitness centre, life insurance, health insurance and travel benefits extended
to employees on vacation such as leave or home travel concession, when such
goods and/or services are used primarily for personal use or consumption of any
employee;
(c) goods and/or services acquired by the
principal in the execution of works contract when such contract results in
construction of immovable property, other than plant and machinery;
(d) goods acquired by a principal, the
property in which is not transferred (whether as goods or in some other form)
to any other person, which are used in the construction of immovable property,
other than plant and machinery;
(e) goods and/or services on which tax has been paid
under section 8; and
(f) goods and/or services used for private or
personal consumption, to the extent they are so consumed.
(10) Where the registered taxable person has
claimed depreciation on the tax component of the cost of capital goods under
the provisions of the Income Tax Act, 1961, the input tax credit shall not be
allowed on the said tax component.
(11) Notwithstanding anything contained in
this section, but subject to the provisions of section 28, no registered
taxable person shall be entitled to the credit of any input tax in respect of
any supply of goods and/or services to him unless
(a) he is in possession of a tax invoice,
debit note, supplementary invoice or such other taxpaying document as may be
prescribed, issued by a supplier registered under this Act or the IGST Act;
(b) he has received the goods and/or services;
(c) the tax charged in respect of such supply
has been actually paid to the credit of the appropriate Government, either in
cash or through utilization of input tax credit admissible in respect of the
said supply; and
(d) he has furnished the return under section 27:
Provided that where the goods against an invoice are received in lots
or instalments, the registered taxable person shall be entitled to the credit
upon receipt of the last lot or instalment.
Explanation.—For the purpose of clause (b), it shall be deemed that
the taxable person has received the goods where the goods are delivered by the
supplier to a recipient or any other person on the direction of such taxable
person, whether acting as an agent or otherwise, before or during movement of goods,
either by way of transfer of documents of title to goods or otherwise.
(12) Where any registered taxable person who
has availed of input tax credit switches over as a taxable person for paying
tax under section 8 or, where the goods and / or services supplied by him
become exempt absolutely under section 10, he shall pay an amount, by way of
debit in the electronic credit or cash ledger, equivalent to the credit of
input tax in respect of inputs held in stock and inputs contained in
semi-finished or finished goods held in stock on the day immediately preceding
the date of such switch over or, as the case may be, the date of such
exemption:
Provided that after payment of such
amount, the balance of input tax credit, if any, lying in his electronic credit
ledger shall lapse.
(13) The amount payable under sub-section (12)
shall be calculated in accordance with generally accepted accounting principles
in such manner as may be prescribed.
(14) In case of supply of capital goods on
which input tax credit has been taken, the registered taxable person shall pay
an amount equal to the input tax credit taken on the said capital goods reduced
by the percentage points as may be specified in this behalf or the tax on the
transaction value of such capital goods under sub-section (1) of section 15,
whichever is higher.
(15) A taxable person shall not be entitled to
take input tax credit in respect of any invoice for supply of goods and/or
services, after the filing of the return under section 27 for the month of
September following the end of financial year to which such invoice pertains or
filing of the relevant annual return, whichever is earlier.
(16) Where credit has been taken wrongly, the
same shall be recovered from the registered taxable person in the manner as may
be prescribed in this behalf.
16A. Taking input tax credit in respect of inputs
sent for job work
(1)
The
“principal” referred to in section 43 A shall, subject to such conditions and
restrictions as may be prescribed, be entitled to take credit of input tax on
inputs sent to a job-worker for job-work if the said inputs, after completion
of job-work, are received back by him within one hundred and eighty days of
their being sent out:
Provided that the “principal” shall be entitled to take credit of
input tax on inputs even if the inputs are directly sent to a job worker for
job-work without their being first brought to his place of business, and in
such a case, the period of one hundred and eighty days shall be counted from
the date of receipt of the inputs by the job worker.
(2) The “principal” shall, subject to such
conditions and restrictions as may be prescribed, be entitled to take credit of
input tax on capital goods sent to a job-worker
for job-work if the said capital goods, after completion of job-work,
are received back by him within two years of their being sent out:
Provided that the “principal” shall be entitled to take credit of
input tax on capital goods even if the capital goods are directly sent to a job
worker for job-work without their being first brought to his place of business,
and in such a case, the period of two years shall be counted from the date of
receipt of the capital goods by the job worker.
(3) Where the inputs or capital goods, as the
case may be, are not received back by the “principal” within the time specified
under sub-section (1) or under sub-section (2), as the case may be, he shall
pay an amount equivalent to the input tax credit availed of on the said inputs
or capital goods, as the case may be, along with interest specified under
sub-section (1) of section 36:
Provided that the said “principal” may reclaim the input tax credit
and interest paid earlier when the inputs or capital goods, as the case may be,
are received back by him at his place of business.
17. Manner of
distribution of credit by Input Service Distributor
(1) The Input Service Distributor may
distribute, in such manner as may be prescribed, the credit of CGST as IGST and
IGST as IGST, by way of issue of a prescribed document containing, inter alia,
the amount of input tax credit being distributed or being reduced thereafter,
where the Distributor and the recipient of credit are located in different
States.
(CGST
ACT)
(1) The Input Service Distributor may
distribute, in such manner as may be prescribed, the credit of SGST as IGST, by
way of issue of a prescribed document containing, inter alia, the amount of
input tax credit being distributed or being reduced thereafter, where the
Distributor and the recipient of credit are located in different States.
(SGST
Act)
(2) The Input Service Distributor may
distribute, in such manner as may be prescribed, the credit of CGST and IGST as
CGST, by way of issue of a prescribed document containing, inter alia, the
amount of input tax credit being distributed or being reduced thereafter, where
the Distributor and the recipient of credit, being a business vertical, are
located in the same State.
(CGST
Act)
(2) The Input Service Distributor may
distribute, in such manner as may be prescribed, the credit of SGST and IGST as
SGST, by way of issue of a prescribed document containing, inter alia, the
amount of input tax credit being distributed or being reduced thereafter, where
the Distributor and the recipient of credit, being a business vertical, are located
in the same State.
(SGST Act)
(3) The Input Service Distributor may
distribute the credit subject to the following conditions, namely:
(a) the credit can be distributed against a
prescribed document issued to each of the recipients of the credit so
distributed, and such invoice or other document shall contain such details as
may be prescribed;
(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 supplier shall be distributed only to that supplier;
(d) the credit of tax paid on input services
attributable to more than one supplier shall be distributed only amongst such
supplier(s) to whom the input service is attributable and such distribution
shall be pro rata on the basis of the turnover in a State of such
supplier, during the relevant period, to the aggregate of the turnover of all
such suppliers to whom such input service is attributable and which are
operational in the current year, during the said relevant period.
18. Manner of
recovery of credit distributed in excess
(1) Where the credit distributed by the Input
Service Distributor is in excess of the credit available for distribution by
him, the excess credit so distributed shall be recovered from such distributor
along with interest, and the provisions of section 51 shall apply mutatis
mutandis for effecting such recovery.
(2) Where the Input Service Distributor
distributes the credit in contravention of the provisions contained in section
17 resulting in excess distribution of credit to one or more suppliers, the
excess credit so distributed shall be recovered from such supplier(s) along
with interest, and the provisions of section 51 shall apply mutatis mutandis
for effecting such recovery.
Explanation. –For the purposes of section
17 and this section, the relevant period shall be-
(a) if the recipients of the credit have
turnover in their States in the financial year preceding the year during which
credit is to be distributed, the said financial year; or
COMMENTS