Distribution of Tax credit / Bar on Use of Tax credits Section 17 of CGST Act, 2017.

Distribution of Tax credit / Bar on Use of Tax credits Section 17 of CGST Act, 2017. 

1. The Registered person simultaneously doing more then one business, purchases are made by any one business and utilise same goods or services or both in his businesses, the input tax credit shall be restricted up to the perportion of use of the goods or services or both;
2.  The Registered person utilise same goods or services or both for taxable supply including zero rated supply and exempt supply in the course of Interstate, Intrastate, the input tax credit will restricted to the extent of taxable supply and zero rated supplies;
3.  The value of exempted supply is inclusive recipient to pay RCM, securities transaction, sale of land, transaction of Schedule-II, paragraph 5 clause (b) and sale of building;
4.  Banking Company, financial institution, non-banking company supplying services of receiving deposits, giving loans or advances have option to avail as per section 17(2) of this act or equal to the fifty percent eligible input tax credit, on capital goods and service and balance will for go.

   5.  Further restriction under section 17(4) of the CGST Act,2017:

    -The option available could not withdrawn during the year;

     -The restriction of 50% will not apply to one registered person to

      another registered person with the same PAN.

      Input tax credit can not claim on the following:

     a. Motor vehicle or other conveyance,

     b. It is not ustilising for taxable supplies i.e further supply of such vehicles or conveyances,

    c. Transportation of passengers,

    d. Imparting training on driving, flying, navigating such vehicles or conveyances,

    e. Transportation of goods, food and beverages, outdoor catering,

    f. Beauty treatment, health services, cosmetic and plastic surgery (Except the supply to a           registered person for outward suppl in the same category or as composit or mixed supply),

    g. Goods or services or both or as part of a taxable composite or mixed supply,

    h. Travel benefit to the employees on vacation LTC or Home Travel Concession,

    i. Works Contract service for construction of immovable property other then installation of        plant and machinery and input service for further supply of works contract service,

    j. Goods or services or both received by a taxable person for construction of immovable          property for personal use, even if it’s construction is for the furtherance of business.

     i. Construction is includes re-construction, renovation, additions or alterations or repairs, to  the extent of capitalisation, to the said immovable property,

    ii. Goods or services or both tax paid u/s 10 of CGST Act,2017,

    iii. Goods or services or both received from non-resident (this is not applicable on import),

    iv. Goods or services or both for personal consumption,

    v. Goods lost, stolen, destroyed in any manner, written off or transferred through gift, the paid as per section 74, 129 and 130 of the CGST Act, 2017.

           Please Note:

• The plant and machinery are inclusive of apparatus, equipment and machinery fixed on foundation at earth but land, building, civil structure, telecommunication towers and pipelines outside the factory premises are not covered under plant and machinery;
• RCM is differed till March 2018 since it is Parliament Election year nothing is conform may deffer for further period;
• Composition supplier is not eligible to collect Tax, could not issue eligible tax invoice or say eligible to collect tax on sale.
• Zero rated supplies means without payment of tax u/s 54 of CGST Act, 2017.

 Note: the Informations provided in this writ up are only to impart education among public at large without consideration.

Suhail Anjum Siddiqui, Advocate

Mobile: 9810043819

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