GST ITC to Garment dealers.

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702 Points Joined July 2011
sir, if the dealer is dealing in garments below 1000. output gst is charged @ 5%. can he claim ITC on capital goods e.g. Air conditioner & ITC on input services e.g. professional fees ?

means output gst rate is 5% with full ITC or 5% with limited ITC ?
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On 06 February 2025 at 10:17 Report
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Master in Accounts & high court Advocate
9066 Points Joined December 2011

When a dealer sells garments priced below ₹1,000, they charge a 5% GST rate.

In this scenario, the dealer can claim Input Tax Credit (ITC) on capital goods, such as air conditioners, and input services, like professional fees.¹

 The GST laws allow businesses to claim ITC on inputs and input services used for business purposes, regardless of the output GST rate.

However, it's essential to ensure that the inputs and input services are used for taxable supplies and comply with the GST regulations.

 In this case, since the dealer is selling garments with a 5% GST rate, they can claim full ITC on eligible inputs and input services, including capital goods like air conditioners and input services like professional fees.

This means the output GST rate is 5% with full ITC.

To summarize: - *ITC on Capital Goods*: Yes, the dealer can claim ITC on capital goods like air conditioners. - *ITC on Input Services*: Yes, the dealer can claim ITC on input services like professional fees. - *Output GST Rate*: 5% with full ITC.

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On 06 February 2025 at 12:44


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