CA SHUBHI KHANDELWAL SAID THAT 'any assets purchased in the firm's name with it's GST Number on the Invoice and used for business purposes, can claim 100% ITC on it.'
IS THIS CORRECT? SUPPOSE A MATERIAL PURCHASE FOR CONSTRUCTION FOR FACTORY. CAN WE ELIGIBLE TO CLAIM ITC WHAT WE HAD PAID GST ON MATERIAL?
2 Replies
Sagar Patel
(Tax and Business Consultant)
(11611 Points)
Replied 06 September 2020
Not fully correct, it's subject to Section. 17(5) blocked Credit and other rules and regulations made under section. 17 of CGST Act, 2017.
Shivam RC
(Student)
(23683 Points)
Replied 06 September 2020
@ Mr. D. Srinivasulu,
CA Shubhi Khandelwal is partly CORRECT.
As per the Provision of "Section 16(1)" of the CGST Act 2017, Input Tax Credit ( ITC ) on Inputs, Input Services and Capital Goods used in the "course or furtherance of business" can be claimed, provided that all the FOUR CONDITIONS as laid down under Section 16(2) of the CGST Act 2017 have been satisfied.
The Four Conditions of Section 16(2) are as follows :
(1). Possession of a Tax Invoice.
(2). Received the Goods or Services.
(3). The Supplier must have paid the taxes to the Government exchequer, and
(4). The Recipient must have filed his Return ( FORM GSTR-3B ).
But unfortunately under GST, we have a concept of "BLOCKED CREDIT". Section 17(5) of the CGST Act 2017 enumerates certain items on which ITC is not available even though they are being used in the course or furtherance of business.
Section 17(5) of the CGST Act 2017 starts with a "NON OBSTANTE CLAUSE" with reference to Section 16(1) [ Notwithstanding anything contained in sub section (1) of Section 16 ]. Section 17(5) is an OVERRIDING SECTION to Section 16(1). Hence even though the goods or services are used in the business, the credit of certain specified items will not be available in the hands of the taxable person. For example :
(a). Motor Vehicles
(b). Outdoor Catering
(c). WORKS CONTRACT SERVICES, etc.
Hope you understood Sir...
Regards,
Shivam RC.
CA Shubhi Khandelwal is partly CORRECT.
As per the Provision of "Section 16(1)" of the CGST Act 2017, Input Tax Credit ( ITC ) on Inputs, Input Services and Capital Goods used in the "course or furtherance of business" can be claimed, provided that all the FOUR CONDITIONS as laid down under Section 16(2) of the CGST Act 2017 have been satisfied.
The Four Conditions of Section 16(2) are as follows :
(1). Possession of a Tax Invoice.
(2). Received the Goods or Services.
(3). The Supplier must have paid the taxes to the Government exchequer, and
(4). The Recipient must have filed his Return ( FORM GSTR-3B ).
But unfortunately under GST, we have a concept of "BLOCKED CREDIT". Section 17(5) of the CGST Act 2017 enumerates certain items on which ITC is not available even though they are being used in the course or furtherance of business.
Section 17(5) of the CGST Act 2017 starts with a "NON OBSTANTE CLAUSE" with reference to Section 16(1) [ Notwithstanding anything contained in sub section (1) of Section 16 ]. Section 17(5) is an OVERRIDING SECTION to Section 16(1). Hence even though the goods or services are used in the business, the credit of certain specified items will not be available in the hands of the taxable person. For example :
(a). Motor Vehicles
(b). Outdoor Catering
(c). WORKS CONTRACT SERVICES, etc.
Hope you understood Sir...
Regards,
Shivam RC.
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