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Input tax credit

prashant Kumar Singh (student) (247 Points)

14 May 2019

can a restaurant avail input tax credit on purchase

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8 Replies

Saurav Bhattacharya (258 Points)
Replied 14 May 2019

only furtherance of business ITC can be claim

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abhishek bardia (partner) (308 Points)
Replied 14 May 2019

no restaurant charging 5% tax cannot avail the benefit of input tax credit on purchase.

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prashant Kumar Singh (student) (247 Points)
Replied 14 May 2019

Abhishek sir , then restaurant charging 18% tax can avail ITC

Saurav Bhattacharya (258 Points)
Replied 14 May 2019

yes 18% can avail

abhishek bardia (partner) (308 Points)
Replied 14 May 2019

no sir, 18% can only be adopted by restaurants within hotels having room tariff above 7500

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Saurav Bhattacharya (258 Points)
Replied 14 May 2019

hotel business opt composition delear can not claim ITC but expect composition delear

Nandini H Gupta (Chartered Accountant ) (369 Points)
Replied 14 May 2019

At present rate notification 11/2018 provides at entry 7(i), rate of 5% with no ITC condition for restaurant (less than 7500 tariff).

Further Entry (ix) provided for option of 18% with explanation to entry (ix) provides that"For the removal of doubt, for entry no (i)- shall attract central tax @ 2.5% without any input tax credit under item (i) above and shall not be levied at the rate as specified under this entry.

So, restaurant (other than in a premise whr tariff is more then 7500/unit/day) the rate of tax is only 5% and no ITC can be claimed.

There is no option to pay @ 18% with ITC been given.

Saurav Bhattacharya (258 Points)
Replied 14 May 2019

The November 2017 GST changes also included a big shift in the ITC. If your restaurant falls into the 5% GST slab, you can no longer claim the ITC on your monthly return. If you fall into the 18% slab, you can still claim ITC.