INPUT TAX CREDIT
18.Manner of taking input tax credit and utilization thereof
(1) Every taxable person shall, subject to such conditions and restrictions as may be prescribed in this behalf, be entitled to take credit of input tax and may deduct the amount of admissible credit in respect of a tax period from the output tax for the same period and pay the remaining amount, if any, to the credit of the appropriate Government within such time and in such manner, as may be prescribed.
Explanation: For the purposes of this section, “appropriate Government” means the Central Government in case of the IGST and the CGST, and the State Government in case of the SGST.
(2) Where the goods and/or services are used by the taxable person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. (Present Rule 6 of CCR, 2004)
(3) Where the goods, other than capital goods, or services are used by the taxable person partly for effecting taxable supplies and partly for effecting non-taxable supplies, including exempt supplies but excluding zero-rated supplies, the amount of credit shall be restricted to so much of the input tax as is attributable to the taxable supplies including zero-rated supplies.
(4) The Central or a State Government may, by notification issued in this behalf, prescribe the manner in which thecredit referred to in sub-sections (2) and (3) above may be attributed.
(5)(a) The input tax credit on account of IGST during a tax period shall first be utilised towards payment of IGST; the amount remaining, if any, shall be utilized towards the payment of CGST and SGST, in that order.
(b) The input tax credit on account of CGST during a tax period shall first be utilised towards payment of CGST; the amount remaining, if any, shall be utilized towards the payment of IGST.
(c) The input tax credit on account of SGST during a tax period shall first be utilised towards payment of SGST; the amount remaining, if any, shall be utilized towards the payment of IGST.
(d) No input tax credit on account of CGST shall be utilized towards payment of SGST.
(e) No input tax credit on account of SGST shall be utilized towards payment of CGST.
(6) Where the input tax credit in respect of a tax period exceeds the output tax for the same period, such excess credit may be carried forward for adjustment against the output tax of the subsequent tax period. The amount of input tax credit so carried forward shall be utilised in the order and in the manner specified in sub-section (5): Provided that where a claim for refund of unadjusted credit is made in terms of subsection (7), the said amount of unadjusted credit shall not be carried forward.
(7) Subject to the provisions of sub-section (8),any unadjusted input tax credit at the end of any tax period may be refunded in accordance with the provisions of section 22 of this Act:
Provided that no refund of unadjusted input tax credit shall be allowed in cases other than exports or in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on outputs:
Further that no refund of unadjusted input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty.
(8) Notwithstanding anything contained in sub-section (7), where any refund is due under the said sub-section to a taxable person who has defaulted in furnishing any return or who is required to pay any tax or penalty,which has not been stayed by any Court, Tribunal or Appellate Authority by the specified date,the proper officer may—
(a) withhold payment of refund due until the said person has submitted the return or paid the tax or penalty, as the case may be;
(b) deduct from the refund due, any tax or penalty which the taxable person is liable to pay but which remains unpaid.
Explanation: For the purposes of this sub-section the expression “specified date” shall mean—
(a) the last date for filing an appeal under this Act, in a case where no appeal has been filed
(b) thirty days after the last date for filing an appeal under this Act, in a case where an appeal has been filed.
(9) Notwithstanding anything contained in sub-section (1), input tax credit shall not be available in respect of the following:
(a) motor vehicles, except when they are supplied in the usual course of business or are used for providing the following taxable services—
(i) transportation of passengers,
(ii) transportation of goods,
(iii) imparting training on motor driving skills;
[(b) high speed diesel oil, motor spirit (commonly known as petrol), aviation turbine fuel, petroleum crude oil and aviation gasoline;][the goods not liable to pay GST ?] (c) goods or services provided in relation to 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;(d) 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;
(e) 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;
(f) goods and/or services on which tax has been paid under section 8 of the Act; and (g) goods and/or services used for private or personal consumption, to the extent they are so consumed.
(10) Notwithstanding anything contained in this section, no taxable person shall be entitled to the credit of any input tax in respect of any supply of goods and/or services to him unless
(a) he is in possession of a tax invoice, issued by a supplier registered under this Act or the IGST Act; and
(b)the tax charged in respect of such supply has been paid to the credit of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply.
(11) Where there is a change in the constitution of a 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 taxable person shall be allowed to transfer the input tax credit that remains unadjusted in its books of accounts to such transferred, sold, merged, demerged, leased or amalgamated business in the manner prescribed.
(12) Where credit has been taken wrongly, the same shall be recovered from the taxable person in the manner as may be prescribed in this behalf.
Source:- Sub-Committee II Report
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