Input tax credit under not allowed under GST
Goods and service used for his personal consumption by the owner.
Under such condition no input tax credit is allowed to the business entity.
Purchase 10 nos to shoes for Rs 1000 each and GST paid Rs 18% and one of the shoes is used by the owner for his personal used under such conditon no Input tax credit is avaialbel for one shoes. As it is used by the owner for his personal consumption.
Input tax credit will not be available on goods which has exempted supplies.
ITC cannot be availed on goods and/or services used for making exempt supplies and supplies where the receiver pays tax on reverse charge basis.
Example A manufacturer of goods purchased goods costing R s 100000 and GST paid Rs 18000 which is exempted supplies hence it cannot claim input tax credit on exempted supplies.
Exempted supplies under GST
Exempt supply is defined in section 2(47) of GST Act. (47) “Exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply. It thus includes the supply of following type of goods and services: (a) Non-taxable supply; (b) Supply attracting nil rate of tax; (c) Supplies exempt under Section 11 of the GST Act excluding IGST and under Section 6 of the IGST Act;
Registration not applied for within 30 days from the date on which you become liable to register
If you have not applied for registration within 30 days from the date on which you become liable to register, you will lose the eligible ITC on inputs and inputs contained in semi-finished or finished goods in stock, on the day before the date on which you become liable to pay tax.
After the time limit for availing Input Tax Credit is crossed
ITC must be availed within the earliest of the following dates-
• 1 year of date of the invoice
• The date of filing of the return for September of the next financial year
• The date of filing of the annual return (due date is 31st December of the next financial year)
On travel benefits to employees on vacation, such as leave or home travel concession
If travel benefits is given to employee ITC on such services cannot be claimed under GST
Goods / service purchased by Composite dealer and pay their input
Composite dealer cannot avail the facility of Input pay on purchase of goods as he registered under composite scheme where his annual turnover is less than 75 lakhs and hence only has to some percentage of its total sale as his tax liability.
Example Mr X a composite dealer purchase goods costing Rs 100000 from Y and also paid 18% GST which comes Rs 18,000 now Mr X has to pay 118000 which he has to show on its purchase cost no separate tax is shown.
All services received for which payment has not been made within 3 months from the date of invoice raised.
If the recipient of a service has not made payment for the receipt of the service along with the tax payable within 3 months from the date of invoice, the Input tax credit availed will be added to the recipient’s liability, along with interest due.
Received services from XYZ for consultancy Rs 100000 and GST paid Rs 18000 but it the payment is not made to Xyz within 3 month then ITC on 18000 is not allowed to recipient of services.
If goods are lost ,stolen or write off, given away as gift and free sample to customer
Under condition given above the ITC will not be claimed by the person who’s goods are stolen written off or given away as charity,gift of free sample to customer.
ABC ltd goods costing Rs 10000 and GST on goods rs 1200 but they are lost by fire .Now ABC ltd cannot avail ITC on Rs 1200.
health insurance taken for employees, except notified services which are obligatory to be provided to employees and On membership of clubs and health & fitness centres, rent-a-cab services and life
On motor vehicles and other conveyance ITC is not allowed on motor vehicles and other conveyance unless they are:
• Further supplied OR
• Used for transporting passengers or goods OR
• Used for imparting training on driving, flying, or navigating such vehicles or conveyances
Example: TATA manufacturer, purchased a Tempo Traveler for the transport of employees within the factory premises. TATA cannot avail ITC on the Tempo Traveler as it has not been used for the above activities.
Health services, cosmetic and plastic surgery,On food and beverages, outdoor catering, beauty treatment
ITC cannot be claimed on above service Health services, cosmetic and plastic surgery,On food and beverages, outdoor catering, beauty treatment
Capital goods, if depreciation has been claimed on the tax component
Input tax credit on capital goods cannot be claimed if f depreciation has been claimed on the tax component in Income Tax return.