Input credit disallowance
This query is : Resolved
11 December 2016
Dear Sir,
Section 16 pertaining to input credit under GST has one clause as under:-"PROVIDED FURTHER that where a recipient fails to pay to the supplier of services, the amount towards the value of supply of services along with tax payable thereon within a period of three months from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in the manner as may be prescribed. "
Is it so that dealers will have to lose on credit due to mere longer credit period for payment to supplier?
Section 16 pertaining to input credit under GST has one clause as under:-"PROVIDED FURTHER that where a recipient fails to pay to the supplier of services, the amount towards the value of supply of services along with tax payable thereon within a period of three months from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in the manner as may be prescribed. "
Is it so that dealers will have to lose on credit due to mere longer credit period for payment to supplier?
CA R SEETHARAMAN
(Expert)
12 December 2016
They will not loose the credit, they can avail the credit again on making the payment.
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CA Suresh Jain
(Expert)
12 December 2016
With due respect to Mr. Seetharaman, I have a dissenting view. In my opinion condition "(paid) within a period of three months from the date of issue of invoice" makes emphatically clear that even late payment of supply will not amount to Payment within 3 months from the date of issue of invoice and therefore the credit (in a sense) disallowed shall not be allowed again.
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12 December 2016
But if that is the case madam, then the provision seems to be very restrictive and stringent towards the dealers. And why is such a provision enacted that affects indirectly the terms and conditions of the dealers and suppliers.Can I get to know the reason of such proposed provision?
CA Suresh Jain
(Expert)
12 December 2016
What you say is right and this probably amounts to restriction on freedom of business/trade. Concerns have been raised on proper forums.
CA R SEETHARAMAN
(Expert)
12 December 2016
Input credit can be taken up to one year from the date of invoice. Mrs. Jain read the provision.
13 December 2016
Can you please provide the relevant clause in which the same is mentioned..
CA R SEETHARAMAN
(Expert)
14 December 2016
Refer section 16 of GST.
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