SECTION 16 MANNER OF TAKING INPUT TAX CREDIT-PART-II

GST Update 30.06.2016

GST DAILY DOSE OF UPDATION:-

SECTION 16 MANNER OF TAKING INPUT TAX CREDIT-PART-II:-

1.     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 to newly constituted business. Similar provision is presently there in Rule 10 of the Cenvat Credit Rules, 2004.

2.     No input tax credit shall not be available in respect of the following:

(a) motor vehicles, except when they are supplied for providing services of transportation of passengers, or transportation of goods, or 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 composition levy.

(f) goods and/or services used for private or personal consumption, to the extent they are so consumed.

The above exclusions are prevalent in present Cenvat Credit Rules, 2004 also and there is no material departure from the nature of input tax credit admissible.

3.     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. This provision is also presently prevalent but if the depreciation claim is withdrawn by revising the Income Tax Return, the input tax credit may be taken.

4.     The credit of any input tax will be available on the strength of 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. However, it is specified 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. This tends to delay the availment of credit in case where goods are received in instalments and so the better alternative is to receive goods against separate invoices for each lot.

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GST Update 30.06.2016

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