INPUT TAX CREDIT UNDER GST & MATCHING WITH RETURN

WHAT’S INSIDE?

In this presentation, we will learn the following topics:

1. Input Tax credit under GST

2. Transitional Provision related to ITC

3. Matching of return

4. Annual & Final Return Under GST

WHAT IS INPUT TAX CREDIT?

ITC does not include Tax paid on purchase from person opting for composition scheme

Input Tax Credit Means

IGST Paid on Inter State Purchases of

goods or services or Import of Goods

CGST Paid on Intra State purchase of goods or services

SGST paid on Intra state purchase of goods or services

Including tax paid on reverse charge

basis

WHO IS ELIGIBLE FOR INPUT TAX CREDIT?

Every registered

taxable person

Is entitled to take credit of

input tax charged

on any supply of goods or

capital goods or services to

him

which are used or

intended to be used in the course or

furtherance of his business

said amount shall be

credited to the electronic

credit ledger of such person

WHAT IS ELECTRONIC CASH LEDGER & ELECTRONIC CREDIT LEDGER?

Electronic Cash Ledger:•Where taxable person can make deposit •In the joint account with government•maintained for the purpose of Payment of Tax, interest, Penalty,

fees or any other amount

Electronic Credit Ledger :•Where Credit of Tax paid on purchase is directly credited to this account•On filing of outward detail by supplier •And the same is accepted by taxable person•This credit can be utilize only for the purpose of Tax Liability and not

for the purpose of Interest or penalty, etc.

PRIORITY OF UTILIZATION OF CREDIT

CGST SGST IGST

CGST SGST IGST

IGST IGST CGST

SGST

CGST IGST SGST

Input 10000

30000 10000

Output 25000

10000 25000

Net (Refund)/Payable

15000

(20000)

15000

Payable - - 10000

TaxesParticular

EXAMPLE ON UTILIZATION OF ITC

Timber MakerMr. A

Furniture MakerMr. B

State XSGST

RATE=10%

Tax Invoice (A)Cost of Goods =

100SGST (G) @10%

= 10CGST @10%

= 10 Total =

120Trf of goods within same State

SGST = Rs.10 CGST = Rs.10

Furniture RetailerMr. C

Trf of goods in other State

Tax Invoice (B)Cost of Goods =

200IGST @20% =

40 Total =

240

IGST PAID= Rs.20

Payment of IGST IGST Payable

=40 Less: CGST ITC =

10 Less: SGST ITC =

10 IGST Paid =

20

Centre:CGST=10%IGST=20%

Payment of GST CGST Payable

=10 SGST Payable = 10 Total GST Paid=

20

State XSGST

RATE=10%

State X Share= Rs.20

CONDITION FOR TAKING INPUT TAX CREDIT?

Registered taxable person is not entitled to input tax credit on supply of goods and/or services unless

He is in possession of a tax invoice

not Older Than 1 year

He has received the goods and/or

services

The tax charged in respect of

such supply has been

actually paid

He has furnished the return under section 34

WHAT ARE INELIGIBLE CREDIT?

Following are ineligible credit:

Motor vehicles except used for:(A) further supply of such vehicles or conveyances ; or(B) transportation of passengers; or(C) imparting training on driving, flying, navigating such vehicles or conveyances;(D) for transportation of goods.

Specified goods and / or services as are used primarily for personal use or consumption of employee

Works contract services when supplied for construction of immovable property, other than plant and machinery,

except where it is an input service for further supply of works contract service;

Goods or services received by a taxable person for construction of an immovable property on his own account,

other than plant and machinery, even when used in course or furtherance of business;

Goods and/or services on which tax has been paid under composition scheme.

Goods and/or services used for private or personal consumption to the extent they are so consumed.NOTE: Where the tax component has been capitalised to the asset and depreciation is claimed on it under Income-Tax Act, then no input tax credit shall be allowed on such tax component.

PROPORTIONATE CREDIT CONCEPT

Proportionate Credit

Goods Used for:

For Business Purpose: 60% Non-Business Purpose: 40%

ITC Allowed: 60%

ITC Disallowed: 40%

Goods Used for:

For Taxable supplies plus zero-rated supplies : 60%

For Non-taxable supplies plus exempted supplies:

40%

ITC Allowed: 60%

ITC Disallowed: 40%

Banking company or a financial institution including NBFC :Have the option to either comply with provision of proportionate credit or Avail of, every month, an amount equal to fifty per cent of the eligible input tax

credit On inputs, capital goods and input services in that month.

From When and on what amount person eligible to take ITC Under different situation

Eligible persons

•Person applied for registration within 30 days from the date of liable to registration and the registration has been granted to him

Credit Entitled •Credit of tax paid on Inputs held in stock

Held as on •The day immediately preceding the date from which he becomes liable to pay tax

If Registration is not obtain on time specified than no credit will be allowed in respect to stock held

Eligible persons

•Person who is not required to register, but obtains Voluntary registration

Credit Entitled •Credit of tax paid on Inputs held in stock

Held as on •The day immediately preceding the date of registration

Eligible persons

•Person ceases to pay composition tax

Credit Entitled •Credit of tax paid on Inputs held in stock & Capital Goods after providing certain reduction as may be prescribed

Held as on •The day immediately preceding the date from which he becomes liable to pay tax under regular scheme

Eligible persons

•Person supplying exempted goods now become taxable

Credit Entitled

•Credit of tax paid on Inputs held in stock relatable to that supplies & Capital Goods after providing certain reduction as may be prescribed exclusively used for such exempted supplies

Held as on •The day immediately preceding the date from which he becomes liable to pay tax on such goods

Transition Provision Related to ITC

EXICESSERVICE TAX

VATGST

TRANSITIONAL PROVISION OF CENVAT CREDIT STANDING IN RETURN

Input Tax

Credit

CENVAT credit

VAT credit

It includes Central excise Service Tax Education cess NCCD krishikalyan cess (only to

service provider) Additional duty u/s 3(1) of Custom Tariff Act

It includesITC under VAT law of state CVD 3(5) under CTA

Can be availed against payment of CGST i.e.as a CGST Credit

Can be availed against payment of SGST i.e.as a SGST Credit

Person Is Register Under Existing Law

Person is register under GST and not opting for composition scheme

CENVAT or VAT is carried forward in return as per Earlier Law

Said Credit can be carried forward as ITC under GST in Following manner

TRANSITIONAL PROVISION OF UN-AVAILED CENVAT CREDIT ON CAPITAL GOODS

Person Is Register Under Existing Law (Excise or Service Tax)

Said Credit can be taken as ITC under GST as CGST

TRANSITIONAL PROVISION OF CREDIT OF INPUT HELD IN STOCK

Person is -Not liable to Register Under Existing Law or

-Manufacture exempted goods or-Providing exempted service or

-Paying tax under composition scheme in earlier law or

-Register importer

Person is register under GST

Condition for taking such credit

Such inputs are used or intended to be used for making taxable supplies under GST

He has passes on the benefit of such credit by way of reduced prices to the recipient

He is eligible for input tax credit on such inputs under GST

He is in possession of invoice not older than 12 month evidencing payment of duty under the earlier law in respect of such inputs

the supplier of services is not eligible for any abatement under GST

In case of dealer/traders-who is not in possession of an invoice evidencing payment of excise

-he shall be allowed to take credit at the rate and in the manner prescribed.

IN CASE OF MANUFACTURE OF EXEMPTED AS WELL NON-EXEMPTED GOODS

Engage in manufacturing of taxable as well as Exempted goodsOr

Engage in provision of taxable as well as exempted services

Now in GST whole supply become taxable

Entitle to take ITC carried forward in return file

under earlier law

Entitle to take credit of duties paid on input held

in stock related to exempted goods or

services

PURCHASE RETURN OF EXEMPTED GOODS

Remove removed exempted goods under earlier law

Removal is within 6 months before appointed date

Return by register person within 6 months from the date of

applicability of GSTOR

Return by unregister person

No taxes will be payable by person returning goods

Return by register taxable person after 6 months from the date of applicability of GST

GST will be payable by person returning goods i.e. treated as fresh supply under GST

PURCHASE RETURN OF DUTY PAID GOODS

Removed duty paid goods under earlier law

Removal is within 6 months before appointed date

Goods are return from person who is not registered

under GST

Return within 6 months from the date of applicability of GST

Refund of tax paid under earlier law may be claimed on receipt of goods.

Return by person register under GST

GST will be payable by person returning goods i.e. treated as fresh supply under GST

Return after 6 months from the date of applicability of GST

No Refund allowed

SALE OF CAPITAL GOODS ON WHICH ITC IS TAKEN

Capital Goods means goods the value of which is capitalized in the books of accounts which are used or intended to be used in the course or furtherance of business. The registered taxable person on sale of capital goods shall: - pay an amount equal to input tax credit taken on such capital goods - reduced by percentage points as prescribed or -tax on the transaction value of such capital goods, whichever is higher.

Particulars AmountITC taken on such capital goods xxxxLess: % prescribed by the Govt xxxxTotal (A) XXXX

Tax on the transaction value of such capital goods (B) XXXX

The taxable person shall pay an amount higher of A or B.

SHIFT OVER FROM NORMAL SCHEME TO COMPOSITION SCHEME UNDER GST

Taxable person registered under normal scheme in existing law

There are unutilized portion of input tax credit under old law

Now Opted for Composition Scheme under GST

Liable to pay credit availed for input held in stock

Reverse credit not availed.

ITC ON GOODS SENT FOR JOB WORK

Eligible to take credit of Input or Capital Goods sent to Job Work provided:

Credit of Input: Input of Capital Goods:

If Inputs is received back in 180 days

Inputs not received back in 180 days

Eligible to take ITCPay the credit utilized along with Interest

If Capital goods is received back in 2 Years

If Capital goods is not received back in 2 Years

Eligible to take ITCPay the credit utilized

along with Interest

If Inputs or Capital goods are received back after 180 days/ 2 years as the case may be

Book the credit along with interest on Receipt

Note: Credit is allowed even if the Inputs/Capital goods is directly received at Job Worker’s premises.

RETURN OVERVIEW

•A return is a statement of specified particulars relating to business activity undertaken by the taxable person during a prescribed period

What is return?

•There will be common e-return for CGST, SGST and IGST.

Whether diff. return under CGST, SGST &

IGST?

•A registered taxable person shall not be allowed to furnish return for tax period if valid return for any previous tax period has not been furnished by him

What if return not filed in any previous period?

•Every registered person is required to file a return for the prescribed tax period. A return needs to be filed even if there is no business activity (i.e. Nil Return) during the said tax period

What if there are no business during period?

Return Summary

Furnish detail of outward supplies on 10th

Furnish detail of inward supplies on 15th

Modify detail of Outward supplies by 17th

Monthly return by 20th of following Month

Annual Return by 31th of December of following year

FURNISHING DETAILS OF OUTWARD SUPPLIES (GSTR 1)

•Every register person except:•Input service Distributor, •Non-resident taxable person, •Composition Taxpayer, •Person deducting TDS or collecting TCS

Who is require to file?

•Detail of outward supplies of goods or services made during the month: I.e. detail of Invoice, Debit Note, Credit note & Revised invoice and same is require to communicate to recipient.

What are detail require to file?

•Due date of GSTR 1 is 10th of following month of relevant tax periodWhat is due date of filing GSTR 1?

FURNISHING DETAIL OF INWARD SUPPLIES ( GSTR 1A)

•Every register person except:•Input service Distributor, •Non-resident taxable person, •Composition Taxpayer, •Person deducting TDS or collecting TCS

Who is require to file?

•Person can Verify, Validate , modify or Delete detail relating to outward supplies furnish by supplier in GSTR 1 which become auto drafted GSTR 1AWhat is the

process?

•15th of Month following the month of relevant tax period.What is the

due date?

ADDITIONAL INWARD SUPPLIES ( GSTR 2 & 2A)

•Every register person except:•Input service Distributor, •Non-resident taxable person, •Composition Taxpayer, •Person deducting TDS or collecting TCS

Who is require to file?

•Recipient in GSTR 2 can add detail of inward supplies which has not been furnished by supplier in GSTR 1 and the same is require to communicated to supplier.

What is the process?

•15th of Month following the month of tax period What is the due date?

•Supplier in auto drafted GSTR 2A, accept, modify or delete detail furnished by recipient in GSTR 2 on or before 17th of month following the month of relevant tax period.

What is action require from supplier?

MISMATCH OF OUTWARD & INWARD SUPPLIES

Mismatch of Outward supplies

• Supplier who has furnished GSTR 1 remain unmatched due to error or omission

• Should rectify details in the return filed for the month in which error or omission found

• And pay tax & interest if any short paid.

Mismatch of Inward supplies

• Recipient who has accepted inward supplies furnished by supplier or add detail of inward supplies, remains unmatched due to error or omission

• Should rectify details in the return filed for the month in which error or omission noticed

• And pay tax & interest if any short paid.

Monthly Return for Normal Taxpayer

•Every register person except:•Input service Distributor, •Non-resident taxable person, •Composition Taxpayer, •Person deducting TDS or collecting TCS

Who is require to file?

•Detail of outward supplies, inward supplies, Input Tax credit availed, Tax Payable, Tax paid and other particulars as prescribed.What are the detail

require to file?

•Monthly return is to be filed in GSTR 3 whether or not any supply has been effected during such a tax period ( nil Return if no supplies)

In which form?

•20th of Month following the month of tax period What is the due date?

FIRST RETURN

•A First Return file by Registered taxable person after grant of registration.

What is First Return?

•Person has to declare detail of outward supplies made during the period of person liable to register till date of registration is granted.

What are special point in First Return?

•Due date of 1st return is 20th of next month following the month of effective date of registrationWhat is due date of

filing first return?

•Person has to declare Nil outward supplies in case there is no supplies in that period.What if there are no

business during that period?

MONTHLY RETURN FOR COMPOUNDING TAX PAYER

•Compounding tax payerWho is require to file?

•Detail of inward supplies of good and services, debit and credit notes, tax payable and tax paid and interest payable the other particulars as prescribed.

What are the detail require to file?

•Monthly return is to be filed in GSTR 4 whether or not any supplies has been effected during such tax period.

In which form?

•18th of Month following the quarter.What is the due date?

MONTHLY RETURN OF TDS

•Every person who require to deduct tax at source(TDS)Who is require to file?

•TDS require to be deducted, TDS deducted, Value on which deducted, interest on belated payment. What are the detail

require to file?•Monthly return is to be filed in GSTR 7In which form?

•10th of Month following the month in which TDS is deducted.What is the due date?

•No return is to be filled for the month in which no TDS is deducted.What if no TDS deducted

during month

ANNUAL RETURN

•Every register person except:•Input service Distributor, •Casual Taxable person•Non-resident taxable person, •Composition Taxpayer, •Person deducting TDS or collecting TCS

Who is require to file?

•In Form GSTR 9In Which form?

•Detail of Expenditure & Purchase•Detail of Income & Supplies•Detail of Return reconciliation along with Refund if anyWhat are detail

require to file?

•31st day of December following the end of financial Year.What if due date ?

•Liable to pay late fees of One Hundred Rupee per day during which such default continue

•Maximum penalty is Rs.5000

Fails to file on or before due date -Outwards Supplies

-Inward Supplies-Monthly Return

-Final Return

•Liable to pay late fees of One Hundred Rupee per day during which such default continue

•Maximum penalty is 0.25% of turnover in a state

Fails to File Annual Return

Levy of Late Fees

ASK YOUR QUARY

CA Nikhil MalaiyaCell: 9545727818

CA Mayur ZamwarCell: 9422855595