Determination Of Input Tax Credit (ITC) In Respect Of Inputs Or Input Services ( Rule-7 of ITC Rules)

Rule 7 of the ITC rules provides for manner of determination of input tax credit in respect of inputs or input services in certain cases and reversal thereof.

Rule 7 of ITC Rules :

Step No.1:    Attribution of total Input Tax Credit in respect of inputs and input services and transfer to e-credit ledger

Step No.2:    Computation of amount of ITC Reversal from Common Credit i.e. “T5”

A. In respect of input tax credit attributable towards exempt supplies

Note : Where the registered person does not have any turnover during
the said tax period, then such value shall be calculated using the value
of last tax period for which turnover are available.

B. In respect of input tax credit attributable towards non-business purposes

=         5% of Common Credit

C. Total Amount of Reversal

=         A+B

Step No. 3 : Total Eligible Input Credit

Input Credit Transfer to e-credit ledger under Step No.1 minus (-) amount of ITC reversal required under Step No.2

Note:

1.         The total amount eligible for input credit shall be computed separately for input tax credit of Central tax, State tax, Union territory tax and integrated Tax.

2.         The input tax credit determined under above sub-rule shall be calculated finally for the financial year before the due date for fffing the return for the month of September following the end of the financial year to which such credit relates, in the manner prescribed in the said sub-rule.

3.         If final amount of Input Credit Reversal> Provisional amount of Input Credit Reversal, then such excess shall be added to the output tax liability of the registered person for a month not later than the month of September following the end of the financial year to which such credit relates and the said person shall be liable to pay interest on the said excess amount at the rate specified in sub-section (1) of section 50 for the period starting from first day of April of the succeeding financial year till the date of payment; or

4.       If final amount of Input Credit Reversal <Provisional amount of Input Credit Reversal, such excess amount shall be claimed as credit by the registered person in his return for a month not later than the month of September following the end of the financial year to which such credit relates.

 
Related Topics ....
Conditions For Taking ITC ( Input Tax Credit) under GST
Limitations On Availing ITC (Input Tax Credit) under GST
Determination Of Input Tax Credit (ITC) In Respect Of Inputs Or Input Services ( Rule-7 of ITC Rules)
Determination Of Input Tax Credit (ITC) In Respect Of Capital Goods (Rule-7 of ITC Rules)
Restrictions On Availing ITC ( Input Tax Credit ) under GST
Utilizing Input Tax Credit (ITC) in respect of IGST, CGST, Cess and SGST/UTGST
Availability Of Input Tax Credit (ITC) In Certain Special Circumstances under GST
Transfer, Reversal Of Input Tax Credit (ITC) Under GST
Distribution Of Credit By Input Services Distributor (ISD) under GST
 
 
 
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