Gst - input credit
This query is : Resolved
11 June 2019
Sale accounted in the FY 2018-2019 and sales return has been accounted in the FY 19-20. Can we avail the input for the CGST & SGST paid during the FY 18-19, when reversing the sales.
12 June 2019
Please update on Sale accounted in the FY 2018-2019 and sales return has been accounted in the FY 19-20. Can we avail the input for the CGST & SGST paid during the FY 18-19, when reversing the sales.
26 July 2024
In general, the rules regarding the input tax credit (ITC) for Goods and Services Tax (GST) are designed to ensure that businesses can claim credit for taxes paid on inputs used to produce taxable supplies. However, there are specific rules about how and when ITC can be claimed or adjusted, especially in cases of sales returns.
Here’s a general breakdown of how this works:
1. **Sales Accounted in FY 18-19:**
- Sales made in FY 18-19 would have been accounted for in that financial year, and the corresponding output tax liability (CGST and SGST) would have been paid during FY 18-19.
2. **Sales Return Accounted in FY 19-20:**
- If a sales return is accounted for in FY 19-20, you generally need to reverse the tax liability associated with that sale. This would typically involve issuing a credit note and adjusting the output tax liability in the return for FY 19-20.
3. **Input Tax Credit Adjustment:**
- The CGST and SGST paid on the sales return would be reflected in the credit note issued. According to GST rules, the input tax credit related to the sale that is being reversed can be adjusted in the period in which the sales return is recorded. This means that while you accounted for the sales in FY 18-19, the adjustment for the input tax credit related to the sales return should typically be done in FY 19-20 when the return is accounted for.
**To answer your question specifically:**
- You cannot avail of the input tax credit (ITC) related to the CGST and SGST paid during FY 18-19 for the sales return recorded in FY 19-20 directly in FY 18-19.
- Instead, the correct approach is to reverse the ITC related to the sales return in FY 19-20, in alignment with when the sales return is accounted for.
Make sure to adjust your records and GST returns accordingly, and consult the GST laws or a tax advisor for specific guidance based on your situation and jurisdiction.
Here’s a general breakdown of how this works:
1. **Sales Accounted in FY 18-19:**
- Sales made in FY 18-19 would have been accounted for in that financial year, and the corresponding output tax liability (CGST and SGST) would have been paid during FY 18-19.
2. **Sales Return Accounted in FY 19-20:**
- If a sales return is accounted for in FY 19-20, you generally need to reverse the tax liability associated with that sale. This would typically involve issuing a credit note and adjusting the output tax liability in the return for FY 19-20.
3. **Input Tax Credit Adjustment:**
- The CGST and SGST paid on the sales return would be reflected in the credit note issued. According to GST rules, the input tax credit related to the sale that is being reversed can be adjusted in the period in which the sales return is recorded. This means that while you accounted for the sales in FY 18-19, the adjustment for the input tax credit related to the sales return should typically be done in FY 19-20 when the return is accounted for.
**To answer your question specifically:**
- You cannot avail of the input tax credit (ITC) related to the CGST and SGST paid during FY 18-19 for the sales return recorded in FY 19-20 directly in FY 18-19.
- Instead, the correct approach is to reverse the ITC related to the sales return in FY 19-20, in alignment with when the sales return is accounted for.
Make sure to adjust your records and GST returns accordingly, and consult the GST laws or a tax advisor for specific guidance based on your situation and jurisdiction.
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