16.1 RP shall be eligible to take ITC on inward supplies used for business purpose

Question-1 [ICSI-E-D19-74-1]

The Input Tax Credit (ITC) is being credited to ........................ of a person which may be used by the person to pay his out-put tax liability.

(A) Electronic Cash Ledger; (B) Electronic Credit Ledger; (C) Electronic Tax Ledger

(D) Electronic Tax Credit Ledger

Question-1A [ICMAI-I-J19-1a(v)-1]

In the common portal, every claim of input tax credit of a registered person shall be credited to

(A) Electronic Cash Ledger; (B) Electronic Credit Ledger;

(C) Electronic Liabilities Register; (D) Electronic Credit Register

Question-2 [FAQ-22/12/18-Ch10-5]

Is credit of all input tax charged on supply of goods or services allowed under GST?

Ans. A registered person is entitled to take credit of input tax charged on supply of goods or services or both to him which are used or intended to be used in the course or furtherance of business, subject to other conditions and restrictions.

16.2 Conditions for taking Input Tax Credit [ITC]

Question-1 [ICSI-E-D19-71-1]

A registered taxable person is eligible to obtain Input Tax Credit (ITC) as per section 16 of the CGST Act, on fulfilling of certain conditions which consist of that such person should :

(i) Be in possession of tax invoice

(ii) Have received the goods

(iii) Supplier have not paid the tax charged

(iv) Supplier have furnished the return u/s 39

(A) (i), (ii) & (iv); (B) (i), (iii) & (iv); (C) (i), (ii) & (iii); (D) (i), (ii), (iii) & (iv)

Question-2 [ICSI-E-J19-O-76-1]

Input tax credit (ITC) as per section 16 of the CGST Act, 2017 be available to a registered person on fulfillment of certain conditions. Find from the following which are such conditions :

(i) Possession of tax invoice

(ii) Receipt of the goods or services

(iii) Tax has been paid to supplier

(iv) Furnished return u/s 39

(A) (i) & (ii); (B) (i), (ii) & (iii); (C) (i), (ii) & (iv); (D) all the above four

Question-3 [ICSI-E-J22-82-1]

As per section 16 of CGST Act, 2017, whether credit on inputs can be availed based on receipt of documents and or on receipt of goods :

(A) Receipt of goods

(B) Receipt of documents

(C) After receipt of goods and documents

(D) Either receipt of documents or Receipt of goods

Question-4 [ICSI-E-J19-O-76-1]

To avail input tax credit, which of the following factors is not relevant :

(A) Tax invoice; (B) Furnishing of return by supplier; (C) Receipt of goods and services;

(D) Payment by buyer for supply received

Question-5 [ICSI-E-D22-70-1]

Which one of the following is not a condition as per section 16(2) of CGST Act, 20l7, to avail Input Tax Credit (ITC) :

(A) Recipient has possession of tax invoice issued by supplier

(B) Goods or Services is actually consumed by Recipient

(C) Filing of valid return by supplier

(D) Supplier pays the tax to the government

16.2.1.2 ITC may be availed based on following particulars in Invoice

Question-1 [ICAI-I-N19-O-10a-4] [FAQ-22/12/2018-Ch10-7]

Documents based on which ITC is taken should contain at least certain details? What are they?

Answer

As per Proviso to rule 36(2), ITC may be availed even if the said document does not contain all the specified particulars but contains following details

• amount of tax charged,
• description of goods or services,
• total value of supply of goods or services or both,
• GSTIN of the supplier and recipient and
• POS in case of inter-State supply

16.2.2.1 Deemed receipts of goods or services on bill to ship to model

Question-1 [FAQ-22/12/2018-Ch10-15] [Bill to Ship to Model]

Who will get the ITC where goods have been delivered to a person other than taxable person (‘bill to’-‘ship to’ scenarios)?

Ans. It would be deemed that the registered person has received the goods when the goods have been delivered to a third party on the direction of such taxable person. So ITC will be available to the person on whose order the goods are delivered to third person.

Question-2 [FAQ-22/12/2018-Ch10-16] [Services received by others on behalf of buyer]

Who will get the ITC where services are provided by the supplier to a person on the direction of and on account of such registered person?

Ans. It would be deemed that the registered person has received the services where the services are provided by the supplier to any person on the direction of and on account of such registered person. [Explanation clause to Section 16(2)(b)]

Question-2A [Services received in Branch]

The registered head office (New Delhi) of ABC Pvt. Ltd. enters into a contract with DEF Pvt. Ltd. of New Delhi for repair and maintenance of computers systems installed at its registered branch office in Bengaluru, Karnataka. DEF Pvt. Ltd. issues an invoice on ABC Pvt. Ltd., New Delhi for the services provided by it. Though the actual services are received by the branch office and not by the head office, section 16(2)(b) allows ITC of such repair and maintenance services to head office.

16.2.2.2 If Goods received in lots, ITC to be availed upon receipt of the last lots

Question-1 [FAQ-22/12/2018-Ch10-8]

Where the goods against an invoice are received in lots or instalments, how will a registered person be entitled to ITC?

Ans. The registered person shall be entitled to the credit only upon receipt of the last lot or installment.

Question-1A [ICSI-E-D21-88-1] [ICAI-I-Ch6-3]

If the goods are received in lots/installment, ----------------------

(a) 50% ITC can be taken on receipt of 1st installment and balance 50% on receipt of last installment.

(b) ITC can be availed upon receipt of last installment.

(c) 100% ITC can be taken on receipt of 1st installment.

(d) Proportionate ITC can be availed on receipt of each lot/installment.

Question-1B [ICSI-E-J22-90-1]

Sathvik has received the goods in 5 lots in respect of a single invoice. Which of the following is in accordance with the first proviso to section 16(2) of CGST Act, 2017:

(A) 100% ITC can be taken on receipt of 1st lot

(B) 50% ITC can be taken on receipt of each lot

(C) 100% ITC can be availed upon receipt of last instalment of the lot

(D) None of the above

Question-2 [ICAI-I-Ch6-Ex3]

XYZ enters in to a contract with ABC for supply of 10 MT of a chemical for Rs.1,18,000 (inclusive of GST of Rs.18,000) in August, 20XX. The chemical is to be delivered in lots over a period of three months. ABC raises the invoice for the entire amount in Aug and XYZ also makes the payment in the same month but the supply is completed in Nov. Though XYZ paid the full tax as early as Aug, it can take the ITC of the same only on receipt of last instalment of the chemical in the month of Nov.

Question-2A [ICSI-E-Ch14-1]

Mr. A orders 30000 tonnes of goods which are to be delivered by the supplier via 3 lots of 10000 each. The lots are sent under a single invoice with the first lot and the payment is made by the recipient for Value of Supply plus GST and the supplier has also deposited the tax with the Government. The 3 lots are supplied in May, June and July 2019. The ITC is available to Mr. A only after the receipt of the 3rd lot. The reason is simple, one of the conditions to avail ITC is the receipt of goods which is completed only after the last lot is delivered.

Queston-3 [ICMA-F-Ch7-Ex-4] [ICMA-I-Ch4-Ex-4] [Normal & Abnormal Loss]

M/s X Ltd Chennai procured goods 10,000 pcs @ Rs.100 per pc. From M/s Y Ltd of Delhi. These goods came to M/s X Ltd of Chennai in the following manner:

Invoice shows 10,000 Kgs. and GST @18%.

You are required to answer:

(a) M/s C Ltd can avail the proportionate credit on 15th Nov and 20th Nov.

(b) M/s C Ltd is eligible for input tax credit if so when.

(c) How much credit is allowed to M/s C Ltd.

Answer

(a) M/s C Ltd. cannot take proportionate credit on the quantity received on 15th Nov and 20th Nov.

(b) M/s C Ltd is eligible to avail the input tax credit on 1st Jan.

(c) ITC allowed = Rs.1,79,640/- [(10,000 Kgs x Rs.100) x 18% x 9980 kgs/10,000 kgs.]

16.3.1 No ITC if Depreciation is claimed on GST component of Capital Goods

Question-1 [FAQ-22/12/2018-Ch10-18]

Where the registered taxable person has claimed depreciation on the tax component of the cost of capital goods under the provisions of the Income TaxAct,1961, will ITC be allowed in such cases?

Ans. The input tax credit shall not be allowed on the said tax component in respect of which depreciation has been claimed.

Question-2 [ICAI-I-Ch6-5]

A supplier takes deduction of depreciation on the GST component of the cost of capital goods as per Income-tax Act, 1961. The supplier can-

(a) avail only 50% of the said tax component as ITC;

(b) not avail ITC on the said tax component;

(c) avail 100% ITC of the said tax component

(d) avail only 25% of the said tax component as ITC

Question-3 [ICMA-F-Ch7-10] [ICMA-I-Ch4-10]

M/s Jay Ltd. being a manufacturer purchased machinery worth Rs.10,00,000 on which GST Rs. 1,80,000 is paid. The manufacturer has following two options:

Option 1: claim depreciation on the entire value of machinery inclusive of GST (i.e Rs.11,80,000) by forgoing ITC on capital goods.

Option 2: claim depreciation on the cost of machine (i.e. Rs.10,00,000) and avail the ITC of GST portion (i.e. 1,80,000).

Answer

As per Section 16(3), If RP has claimed depreciation on the tax component of cost of capital goods and plant and machinery under Income-tax Act, ITC on said tax component shall not be allowed.

Question-4 [ICSI-E-J21-O-84-1]

Which out of the following is the false statement regarding eligibility and conditions for taking input tax credit as per section 16 of CGST Act ?

(A) Every registered person is eligible to take credit of GST charged to him for his inward supply of goods/services if he uses such supplies in course or furtherance of his business.

(B) Payment of tax and filing of return is also necessary to claim ITC.

(C) Where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment.

(D) Depreciation under section 32 of the Income Tax Act shall be claimed on the tax portion on which ITC has been claimed.

16.3.2 No ITC is available on tax paid in pursuance of an order for fraud etc

Question-1 [FAQ-22/12/2018-Ch10-34]

Whether input tax credit can be taken on payment of tax after adjudication?

Ans.

Input tax credit cannot be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand has been confirmed in cases of evasion by reason of any fraud, willful misstatement or suppression of facts. (Rule 36(3) of the CGST Rules, 2017)

Question-2 [ICMA-F-Ch7-Ex-3] [ICMA-I-Ch4-Ex-3]

M/s. X Ltd. supplied taxable goods from the factory after manufacture in the month of Oct 2017 for sale to a distributor for Rs.8,00,000. M/s X Ltd has suppressed this transaction. However, he deposited the GST @12% on these goods on 10-1-2018 against show cause notice issued u/s 74 (when there is fraud) of the CGST Act, 2017 by the Central Tax Officer and passed the order accordingly.

Whether distributor namely recipient of these goods is eligible to take input tax credit.

Answer

Statutory Provision

Rule 36(3) provides that ITC shall not be availed of tax paid in pursuance of any order where any demand has been confirmed on account of any fraud, willful misstatement or suppression of facts.

Comments

In the given case no ITC was available to M/s X Ltd because he has paid tax in pursuance of order where any demand has been confirmed on account of any fraud, willful-misstatement or suppression of facts and so on u/s 74.

16.4 Time limit for availing ITC on Inward supplies

Question-1 [ICMAI-F-Ch7-12] [ICMAI-I-Ch4-12]

M/s X Ltd. purchased input for Rs.2,00,000 vide Tax Invoice dated 1st Dec 2018. M/s X Ltd. has submitted annual return for FY 2018-19 on 15th Sep 2018 and return for Sep 2019 has been filed 19th Oct 2019.

a) Find the time limit within which input tax credit can be availed on input by X Ltd.

b) M/s X Ltd. wants to take input tax credit on such input on 30th Sep 2019, advise.

Answer

Statutory Provision

As per Section 16(4), RP shall not take ITC on any invoice/ DN after

30^th day of Nov following the end of FY to which such invoice/DN pertains or

furnishing of the relevant annual return,

whichever is earlier.

Conclusion

Time limit to avail the credit is earlier of the following:

(a) 30^th Nov 2019 or (b) 15th Sep 2019

Therefore, M/s X Ltd has to avail the ITC on or before 15th Sep 2019.

Advise: After 15th Sep 2019, RP cannot take credit based on invoice pertaining to supply of goods or services for the period 1st Apr 2018 to 31 Mar 2019. Hence, in the given case M/s X Ltd is not eligible to avail ITC on 30th Sep 2019.

Answer as per Old Provision effective upto 30-09-2022

As per Section 16(4), RP shall not take ITC on any invoice/ DN after

due date of furnishing of the return u/s 39 for the month of Sep or [i.e. 20^th Oct]

furnishing of the relevant annual return,

whichever is earlier.

Hence time limit to avail the credit is earlier of the following:

(a) 20^th Oct 2019 or (b) 15th Sep 2019

Therefore, M/s X Ltd has to avail the ITC on or before 15th Sep 2019.

Question-2 [ICSI-E-J21-67-1]

Purchase invoices beyond what period are not eligible for input tax credit ?

(A) 6 months; (B) 1 year; (C) 2 years; (D) 9 months

Answer

As per SA

Section 16(4) of Central Goods and Services Act, 2017 provides that A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Question-2A [ICSI-E-J21-68-1]

Balaram has made purchase of raw material vide invoice dated 11.01.2021 which has IGST of Rs.24,000 (18%). Up to which date, he is entitled to take input tax credit ?

(A) 10.07.2021; (B) 10.01.2022; (C) 10.01.2023; (D) 10.10.2021

Answer

As per SA

Section 16(4) of Central Goods and Services Act, 2017 provides that A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.

16.4.1 Time limit shall not apply for reclaiming of Reversed ITC

Question-1 [FAQ-22/12/2018-Ch10-12]

Is there any time limit for re-claiming the credit where payment is made after 180 days from the date of issue of invoice?

Ans. No. The time limit specified in section 16(4) shall not apply to a claim for re-availing of any credit, in accordance with the provisions of the Act or these rules, that had been reversed earlier.

16.5.1 Reversal of ITC along with interest on non-payment to supplier within 180 days

Question-1 [ICAI-I-Ch6-1]

In which of the following situations, taxpayer needs to reverse the credit already taken?

(a) If payment is not made to the supplier within 45 days from the date of invoice

(b) If payment is not made to the supplier within 90days from the date of invoice

(c) If payment is not made to the supplier within 180 days from the date of invoice

(d) None of the above

16.5.2.1 Deemed supplies without consideration as per Schedule-I

Question-1 [FAQ-22/12/2018-Ch10-13]

Certain supplies mentioned in Schedule I of the Act are deemed to be supplies even if made without consideration. Will the payment within 180 days’ rule for credit apply even to such cases?

Ans. No. The value of supplies made without consideration as specified in Schedule I shall be deemed to have been paid for the purposes of the second proviso to section 16(2). (Proviso to Rule 37)

Question-2 [ICMAI-F-Ch7-9] [ICMAI-I-Ch4-9]

M/s X Ltd. has establishment in Chennai, and establishment in Hyderabad. Supply of goods (open market value of Rs.5,00,000) made by M/s X Ltd. Chennai to M/s X Ltd. Hyderabad. M/s X Ltd. Chennai paid IGST of Rs.60,000. Accordingly M/s X Ltd. Hyderabad availed the ITC of Rs.60,000.

2nd Proviso to Section 16(2) of CGST Act, 2017 is applicable in the given case (i.e to revere the credit where payment is not made within 180 days from the date of invoice). Advise.

Answer

Statutory Provision

1^st Proviso to Rule 37(1) provides that value of supplies made without consideration as specified in Schedule I shall be deemed to have been paid.

In the given case, M/s X Ltd. Hyderabad is not required to reverse the ITC. Since, as per Section 25(4) two establishments are considered as establishment of distinct person and accordingly, supply made by one establishment to another establishment will be covered under Schedule I without consideration

16.5.2.2 Increase in value of supplies u/s 15

Question-1 [FAQ-22/12/2018-Ch10-14]

As per section 15(2)(b), any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supply and not included in the price actually paid or payable for the goods or services or both are added in the value of a supply. In such cases, no consideration is to be paid to the supplier. Whether ITC is available in such cases?

Ans. Value of supplies on account of any amount added in accordance with the provisions of section 15(2)(b) is deemed to have been paid for the purposes of the second proviso to section 16(2). Therefore, ITC is admissible. (Second Proviso to Rule 37)

16.5.2.3 ITC availed on payment of tax on supplies taxable under RCM

T-1 [ICSI-P-D18-5a(i)-2] [FAQ-22/12/2018-Ch10-10]

Explain the consequences according to provisions of GST law, if a recipient of goods or services or both does not make payment for the supply within 180 days.

Answer

2nd Proviso to Section 16(2)

Where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon.

Question-1 [FAQ-22/12/2018-Ch10-9] [ICAI-F-Ch8-3] [ICAI-I-Ch6-10]

Can a person take ITC without payment of consideration for the supply along with tax to the supplier?

Answer

Yes, the recipient can take ITC. However, he is required to pay the consideration along with tax within 180 days from the date of issue of invoice. This condition is not applicable where tax is payable on reverse charge basis. Further, in case of deemed supplies without consideration and additions made to the value of supplies on account of supplier’s liability, in relation to such supplies, being incurred by the recipient of the supply, consideration is deemed to have been paid.

16.5.3 Reclaiming of Reversed ITC on payment to Supplier

Question-1 [ICAI-F-N18-O-2b-5]

A registered supplier of taxable goods supplied goods valued at Rs.2,24,000 (inclusive of CGST Rs.12,000 and SGST Rs.12,000) to Mohan Ltd. under the forward charge on 15-08-2017 for which tax invoice was also issued on the same date. The inputs were received by Mohan Ltd. on 15-08-2017. Mohan Ltd. availed credit of Rs.24,000 on 18-08-2017. But Mohan Ltd. did not make any payment towards such supply along with tax thereon to the supplier.

Is Mohan Ltd. eligible to avail input tax credit on such supply? What are the consequences of such non-payment by Mohan Ltd.?

Discuss input tax credit provisions if Mohan Ltd. makes the payment of Rs.2,24,000 to the supplier on 18-03-2018.

Answer

Statutory Provision

a) 2^nd Proviso to Section 16(2) read with Rule 37(1) - RP, who has availed of ITC on any inward supplies but fails to pay to the supplier, value of supply & tax within 180 days from the date of issue of invoice, he shall pay or reverse ITC availed proportionate to the amount not paid along with interest payable thereon u/s 50 in GSTR-3B for the tax period immediately following the period of 180 days from the date of the issue of the invoice.

b) 3^rd Proviso to Section 16(2) - Recipient shall again avail ITC on payment made by him to supplier.

c) Rule 37(4) - Time limit specified u/s 16(4) shall not apply to a re-availing of any Reversed ITC.

Comments

Invoice Date = 15-08-2017

ITC = Rs.24,000

Date of availing of ITC = 1-08-2017

180 days from invoice date = 11-02-2018

(a) Availing of ITC on receiving of invoice and services

As per section 16, Mohan Ltd. is eligible to avail ITC of the tax paid on inputs received by it on the basis of the invoice issued by the supplier provided other conditions for availing ITC are fulfilled.

Payment of value of the goods along with the tax to the supplier is not a pre-requisite at the time of availing credit, but Mohan Ltd. has to pay the said amount within 180 days from the date of issue of invoice.

(b) Reversal of ITC on non-payment of ITC within 180 days from invoice date

If Mohan Ltd. fails to make payment within 180 days towards such supply along with tax thereon to the supplier, he shall pay or reverse ITC of Rs.24,000 along with interest @18% p.a. in GSTR-3B of Feb 2018.

If Mohan Ltd. does not pay or reverse ITC as stated above, subject to the provisions of section 126, a general penalty which may extend to Rs.25,000 may also be levied for such contravention by Mohan Ltd. u/s 125.

(c) Re-availing of ITC on payment of Rs.2,24,000 after 180 days

If Mohan Ltd. makes the payment of Rs.2,24,000 (Value + tax) to the supplier on 18.03.2018 i.e., after the expiry of 180 days from date of issue of invoice, he shall take ITC of Rs.24,000 after payment of Rs.2,24,000

Question-1A [ICMA-I-J18-6a(ii)-4]

M/s. Alpha Limited Ahmadabad receives the input services from M/s. Beta Limited of Mumbai who raises the invoice for supply of services on 25th Nov, 2017 and availed the credit on the same date. Find the time limit within which M/s. Alpha Limited is required to pay the bill amount to M/s. Beta Limited. Also explain the consequences if payment is not made within the stipulated period as mentioned in Section16(2) of CGST Act.

Answer

Statutory Provision

a) 2^nd Proviso to Section 16(2) read with Rule 37(1) provides that RP, who has availed of ITC but fails to pay value of supply & tax to the supplier within 180 days from the date of issue of invoice,  shall reverse ITC in the month immediately following 180 days from the date of the issue of the invoice.

b) 3^rd Proviso to Section 16(2) provides that Recipient shall again avail ITC on payment made by him to supplier.

c) Rule 37(4) provides that Time limit specified u/ss 16(4) shall not apply to a claim for re-availing of any Reversed ITC.

Comments

(a) Availing of ITC on receiving of invoice and services

As per section 16, M/s Alpha Ltd. is eligible to avail ITC of the tax paid on inputs received by it on the basis of the invoice issued by the supplier provided other conditions for availing ITC are fulfilled.

Payment of value of the goods along with the tax to the supplier is not a pre-requisite at the time of availing credit, but Alpha Ltd. has to pay the said amount within 180 days from the date of issue of invoice i.e by 23/05/2018

Working note:

25/11/2017 + 180 = 23/05/2018

(b) Reversal of ITC on non-payment of ITC within 180 days from invoice date

If M/s Alpha Ltd. fails to make payment within 180 days i.e by 23/05/2018 towards such supply along with tax thereon to the supplier, he shall pay or reverse ITC along with interest @18% p.a. in GSTR-3B of May 2018.

Answer as per old Provision [effective upto 01/10/2022]

Said ITC will be added to his output tax liability along with interest thereon.

Question-1B [ICMAI-F-Ch7-8] [ICMAI-I-Ch4-8]

M/s A Ltd of Aluva (Kerala) receives the input service from M/s B Ltd of Bengaluru who raises the invoice for supply of service on 17th Dec 2017 and availed the credit on the same date.

a) Find the time limit within which M/s A Ltd is required to pay the bill amount inclusive of tax to supplier of service.

b) Also explain consequence if payment is not made within the stipulated time period as mentioned in 2nd proviso to section 16(2) of the CGST Act, 2017.

c) Re-credit is allowed if the payment is made to the supplier of service after expiry of time period as mentioned in 2nd proviso to section 16(2) of the CGST Act, 2017.

Answer

Statutory Provision

a) 2^nd Proviso to Section 16(2) read with Rule 37(1) provides that RP, who has availed of ITC but fails to pay value of supply & tax to the supplier within 180 days from the date of issue of invoice,  shall reverse ITC in the month immediately following 180 days from the date of the issue of the invoice.

b) 3^rd Proviso to Section 16(2) provides that Recipient shall again avail ITC on payment made by him to supplier.

c) Rule 37(4) provides that Time limit specified u/ss 16(4) shall not apply to a claim for re-availing of any Reversed ITC.

Comments

a) In the given case, M/s A Ltd must pay to M/s B Ltd value of services and GST by 15th June 2018.

Working note:

18/12/2017 to 15/06/2018 = 180 days

b) In case M/s A Ltd does not pay by 15th June 2018, the credit availed by it will be paid or reversed in next GSTR-3B.

c) There is no time limit for taking such ITC.

16.7 Misc Questions

T-1 [ICSI-P-D21-4b-5]

Explain the mechanism under the CGST Act, 2017 for claiming Input Tax Credit while making payment of Taxes.

Question-1 [ICSI-E-J19-6b-5]****

PQ Ltd. a manufacturer of taxable goods provides the following information regarding inward supplies for the month of Sep, 2018:

Compute the Input Tax Credit (ITC) available to PQ Ltd. for the month of Sept, 2018.

Note :

(i) All the conditions necessary for availing the ITC have been fulfilled.

(ii) PQ Ltd. is not eligible for any threshold exemption.

Answer

Computation of ITC available to PQ Ltd. for the month of Sep 2018

Note

1. As per section 16(2)(a), ITC may be availed only if, RP is in possession of tax Invoice

2. As per 1st Proviso to Section 16(2), ITC can be availed only on receipt of last installment (i.e. Nov, 2018]

3. As per section 16(3), If RP has claimed depreciation on the tax component of cost of capital goods under Income-tax Act, ITC on said tax component shall not be allowed.

4.  As per Section 16(4), RP shall not take ITC on any invoice/ DN after

30th Nov, 2018 following the end of FY to which such invoice/DN pertains or

furnishing of the relevant annual return, [i.e. 25th Oct, 2018]

whichever is earlier.