FAQ ON CHAPTER 10 RELATING TO INPUT TAX CREDIT PART-I

GST Update 24.10.2016

GST DAILY DOSE OF UPDATION:-

FAQ ON CHAPTER 10 RELATING TO INPUT TAX CREDIT PART-I:- This update covers clarifications issued in FAQs pertaining to input tax credit.

Question no. 2:-It clarifies that the credit of CGST cannot be utilised for payment of SGST and vice-versa. This indicates that restrictions as regards utilisation of input tax credit will continue in GST regime also. Moreover, it is also been perceived by many analysts that even the credit of CGST will be available for utilisation State wise thereby defeating the concept of seamless credit in GST regime. It is also to be noted that IGST credit can be used for payment of CGST and SGST. IGST is total of SGST and CGST. Hence, indirectly credit of IGST (which is CGST + SGST) can be used as CGST or SGST.

Question no. 3:-This clarifies that GST paid under reverse charge basis shall be considered as input tax and credit will be admissible for the same. It is pertinent to mention that presently the credit of tax paid under reverse charge mechanism is admissible except in case of rent-a-cab services, works contract services availed by a normal assessee not engaged in providing such services. It is hoped that such restrictions are not carried forward in the GST regime also.

Question no. 4:-This speaks about the provision of tax paid on capital goods may be availed in one instalment. Presently, the cenvat credit of capital goods is taken in two instalments and the provision to avail credit in one instalment in GST regime is welcome step.

Question no. 5:-This clarifies that taxpayer will be entitled to avail credit on inputs, semi-finished goods and finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax. However, credit on pre-registration stock would not be admissible if registration has not been obtained within a period of 30 days from the date on which he becomes liable to registration thereby meaning that in order to avail credit on stock prior to registration, it is necessary that registration has been obtained within the stipulated time period.

Question no. 7:-This further clarifies that even person obtaining voluntary registration is entitled for availing credit of tax contained in inputs, semi-finished goods and finished goods held in stock immediately preceding the date of registration.

We will carry some other questions in our next update.

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GST Update 24.10.2016

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