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Section 18 of cgst act

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Moneesh Nair

346 Points Posted on 03 June 2020

Just wanted to clear one doubt...
E.g Mr X supplies 3 exempt products(A,B,C). On 4th of june, product A and B becomes taxable and Mr X has an input of 2lakhs(tax) as on 3rd june.
So as per section 18 Mr X can take the credit of 2 lakh.

My question is that, as product A and B became taxable whereas product c is exempt, whether we have to apply apportionment provision of section 17 or take the full credit of 2 lakh ?

Replies (4)

Quick Summary

This discussion clarifies the application of Section 18 of the CGST Act regarding input tax credit (ITC) when goods change tax status. It addresses a scenario where products initially exempt become taxable. The key question is whether the full input tax credit of ₹2 lakhs can be claimed, or if apportionment under Section 17 applies. The consensus is that Section 17(2) must be applied due to the mixed use of inputs for both exempt and taxable supplies.

Shivam RC

Student

7666 Points Posted on 03 June 2020

Apportionment Provision i.e. Section 17(2) of the CGST Act 2017 will be applicable here since partly used for Exempt Supply and partly is being used towards Taxable Supply.