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Manner of determination of input tax credit

Posted @ August 17, 2017, 10:08 pm under (GST Compliances)

Manner of determination of input tax credit in respect of inputs or input services and reversal thereof (GST Rule 42)

For the purpose of reflecting Input tax credit, what ever applicable the Input credit data shall to be bifurcated in the following manner. Subsequently 
T1’, ‘T2’, ‘T3’ and ‘T4’ shall be determined and declared by the registered person at the invoice level in FORM GSTR-2 and therefore ledgers and entries should be made in the following manner going forward:
 

(a)

 the total input tax involved on inputs and input services in a tax period, be denoted as

‘T’

 

(b)

the amount of input tax, out of ‘T’, attributable to inputs and input services intended to be used exclusively for the purposes other than business, be denoted as

‘T1’

 

(c)

the amount of input tax, out of ‘T’, attributable to inputs and input services intended to be used exclusively for effecting exempt supplies, be denoted as

‘T2’

 

(d)

the amount of input tax, out of ‘T’, in respect of inputs and input services on which credit is not available under sub-section (5) of section 17 (as per below), be denoted as                 

‘T3’

 

 

(i) motor vehicles and other conveyances except when they are used for making the following taxable supplies, namely:—
(A) further supply of such vehicles or conveyances ;

   
 

(ii) the following supply of goods or services or both (i) food and beverages, outdoor catering, health services

   
 

(ii) membership of a club, health and fitness centre;

   
 

(iii) rent-a-cab, life insurance and health insurance except where–

   
 

(iv) travel benefits extended to employees on vacation such as leave or home travel concession;

   
       

(e)

the amount of input tax credit credited to the electronic credit ledger of registered person, be denoted as ‘C1’ and calculated as

 C1 = T- (T1+T2+T3);

 

 

 

 

 

(f)

the amount of input tax credit attributable to inputs and input services intended to be used exclusively for effecting supplies other than exempted but including zero rated supplies, be denoted as

‘T4’

 

 

 

 

 

(g)

​​
T1’, ‘T2’, ‘T3’ and ‘T4’ shall be determined and declared by the registered person at the invoice level in FORM GSTR-2;

 

 

 

(h)

input tax credit left after attribution of input tax credit under clause (g) shall be called common credit, be denoted as ‘C2’ and calculated as-

C2 = C1- T4;

 

(i)

the amount of input tax credit attributable towards exempt supplies, be denoted as ‘D1’ and calculated as-

D1= (E÷F) × C2

where, ‘E’ is the aggregate value of exempt supplies during the tax period, and
‘F’ is the total turnover in the State of the registered person during the tax period:

(j)

the amount of credit attributable to non-business purposes if common inputs and input services are used partly for business and partly for non-business purposes, be denoted as ‘D2’, and shall be equal to five per cent. of C2; and

‘D2’

 

(k)

the remainder of the common credit shall be the eligible input tax credit attributed to the purposes of business and for effecting supplies other than exempted supplies but including zero rated supplies and shall be denoted as ‘C3’, where,- C3 = C2 - (D1+D2);

‘C3’,

 

 

 

 


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