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Conditions, Restriction and Manner of taking Input Tax Credit (ITC) by the Persons under Section 18(1) [Rule 40] of CGST Act, 2017

(A) Time limit for taking Input Tax Credit (ITC)  by a Person covered under Section 18(1) [Section 18(2)]

A registered person shall not be entitled to take input tax credit under section 18(1) in respect of any supply of goods or services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply.

(B) Manner of taking input credit under section 18(1) [Rule 40]

In the following cases tax credit shall be available to supplier of goods or services or both on the stocks and or capital goods subject to fulfilment of conditions and restrictions as specified in each case:

Case / Situation

Rules Applicable

Any person who has applied for registration within 30 days from the date on which he becomes liable for registration and has been granted such registration — Section 18(1)(a)

(1) He is entitled to take 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. [Rule 40(1)(a)]
(2) The registered person shall within 30 days from the date of his becoming eligible to avail of input tax credit under section 18(1) shall make a declaration, electronically, on the Common Portal in FORM GST ITC-01 to the effect that he is eligible to avail of input tax credit as aforesaid. [Rule 40(1)(b)]
(3) The declaration under rule 40(1)(b) shall clearly specify the details relating to the inputs held in stock or inputs contained in semi-finished or finished goods held in stock, or as the case may be, capital goods on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act, in the case of a claim under Section 18(1)(a). [Rule 40(1)(c)]
(4) The details furnished in the declaration under rule 40(1)(b) shall be duly certified by a practicing chartered accountant or a cost accountant if the aggregate value of claim on account of central tax, State tax, Union territory tax and integrated tax exceeds Rs. 2,00,000. [Rule 40(1)(d)]

A person who takes registration under subsection (3) of section 25 i.e. a person who takes voluntarily
registration, though not liable to be registered under the provisions of CGST Act -Section 18(1)(b)

(1) He is entitled to take 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 grant of registration [Rule 40(1)(a)]
(2) The registered person shall within 30 days from the date of his becoming eligible to avail of input tax credit under section 18(1) shall make a declaration, electronically, on the Common Portal in FORM GST ITC-01 to the effect that he is eligible to avail of input tax credit as aforesaid. [Rule 40(1)(b)]
(3) The declaration under rule 40(1)(b) shall clearly specify the details relating to the inputs held in stock or inputs contained in semi-finished or finished goods held in stock, or as the case may be, capital goods on the day immediately preceding the date of grant of registration, in the case of a claim under Section 18(1)(b). [Rule 40(1)(c)]
(4) The details furnished in the declaration under rule 40(1)(b) shall be duly certified by a practicing chartered accountant or a cost accountant if the aggregate value of claim on account of central tax, State tax, Union territory tax and integrated tax exceeds Rs. 2,00,000. [Rule 40(1)(d)]

Where any registered person ceases to pay tax under section 10 i.e. composition Levy and shifts to regular scheme — Section 18(1)(c)

(1) He is entitled to take Input Tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax under section 9 i.e. at regular rates. [Rule 40(1)(a)]
(2) The registered person shall within thirty days from the date of his becoming eligible to avail of input tax credit under section 18(1) shall make a declaration, electronically, on the Common Portal in FORM GST ITC-01 to the effect that he is eligible to avail of input tax credit as aforesaid. [Rule 40(1)(b)]
(3) The declaration under rule 40(1)(b) shall clearly specify the details relating to the inputs held in stock or inputs contained in semi-finished or finished goods held in stock, or as the case may be, capital goods on the day immediately preceding the date from which he becomes liable to pay tax under section 9, in the case of a claim under Section 18(1)(c). [Rule 40(1)(c)]
(4) The details furnished in the declaration under Rule 40(1)(b) shall be duly certified by a practicing chartered accountant or a cost accountant if the aggregate value of claim on account of central tax, State tax, Union territory tax and integrated tax exceeds Rs. 2,00,000. [Rule 40(1)(d)]
(5)The input tax credit claimed in accordance with the provisions of section 18(1)(d) shall be verified with the corresponding details furnished by the corresponding supplier in FORM CSTR-4on the Common Portal. [Rule 40(1)(e)]
(6) The input credit claimed on capital goods shall be subject to subject rule 40(1)(a) read with rule 40(2). (See Rule 40(1)(a) and rule 40(2) below the box.

Where an exempt supply of goods or services or both by a registered person becomes a taxable supply —Section 18(1)(d)

(1) He is entitled to take Input Tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the day immediately preceding the date from which such supply becomes taxable [Rule 40(1)(a)]
(2) The registered person shall within thirty days from the date of his becoming eligible to avail of input tax credit under section 18(1) shall make a declaration. electronically, on the Common Portal in FORM GST ITC-01 to the effect that he is eligible to avail of input tax credit as aforesaid. [Rule 40(1)(b)]
(3) The declaration under rule 40(1)(b) shall clearly specify the details relating to the inputs held in stock or inputs contained in semi-finished or finished goods held in stock, or as the case may be, capital goods on the day immediately preceding the date from which supplies made by the registered person becomes taxable, in the case of a claim under Section 18(1)(d). [Rule 40(1)(c)]
(4) The details furnished in the declaration under rule 40(1)(b) shall he duh certified by a practicing chartered accountant or a cost accountant if the aggregate value of claim on account of central tax, State tax, Union territory tax and integrated tax exceeds Rs. 2,00,000. [Rule 40(1)(d)]
(5) The input tax credit claimed in accordance with the provisions of section 18(1)(c) shall be verified with the corresponding details furnished by the corresponding supplier in FORM GSTR-1 on the Common Portal. [Rule 40(1)(e)]
(6) The input credit claimed on capital goods shall be subject to subject rule 40(1)(a) read with rule 40(2). (Sec rule 40(1)(a) and rule 40(2) below the box. [Rule 40(1)(f)]

 
Persons who are eligible to take Input Tax Credit (ITC) under Section 18(1) of CGST Act, 2017 GST - Ready Reckoner in India How to Claim Input Tax Credit (ITC) on Capital Goods of CGST Act, 2017
 

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