Because of various regulation identifying with ITC under GST Regime there consistently stay high chances of blunders or errors in claiming Input Tax Credit. In this article we attempt to highlight 12 basic errors which you should check while examining Input Tax Credit.
1. CONSIDERING ITC BALANCE TO PAYOFF LIABILITY UNDER REVERSE CHARGE
-Beneficiary can’t use ITC for releasing RCM liabilities. GST portal even does not permit such modification while filing returns.
-ITC can be claimed in the same time where taxes are paid by the beneficiary under RCM in end of earlier month.
2. ITC COULD BE CLAIMED ON THE TAXES PAID UNDER RCM ON THE GTA SERVICES
ITC is confined for supplier of GTA service who pays at 5%. The client who gives taxes under RCM could avail ITC if qualified.
3. TREATING EXPORT OF GOODS/SERVICES AS EXEMPTED GOODS/SERVICES AND NOT AVAILING ELIGIBLE CREDITS RELATED TO SAME
Refund of taxes paid on the goods or services could be profited by the individual making the exports even when yield GST isn’t paid on exported goods/exported services.
4. NON REVERSAL OF ITC IN CASES WHERE PAYMENT IS NOT MADE TO SUPPLIER WITHIN 180 DAYS FROM THE DATE OF INVOICE.
-Inversion of ITC with interest is required. (as of late the change for no amendments has been made however review applicability not clarified.)
-The consideration to empower re credit on future payment can be proposed.
5. Inter STATE PURCHASES MADE FROM UNREGISTERED PERSONS
-Acquire products just from a registered merchant and benefit eligible ITC.
-ITC availed based on receipt of registered vendor given by the unregistered individual would not be accessible. Further availing ITC based on photocopies might be questioned
-No confinement for profiting 100% of ITC on the buy of capital merchandise. [ half credit was in before focal extract regime].
6. Availing ITC ON SUPPLIES SPECIFICALLY BLOCKED U/S 17
-Not permitted and whenever availed must be reversed.
7. Benefiting CREDIT WHEN THE SAME IS RESTRICTED BY RATE NOTIFICATION
-Where ITC was benefited when the conditional of notice limits. Acknowledge to be reversed with interest.
8. Benefiting ITC MERELY ON RECEIPT OF INVOICE WITHOUT ACTUAL RECEIPT OF GOODS/SERVICES
-ITC could be benefited just on receipt of invoice and goods( valuable receipts on guidance of buyer included).
9. NON REVERSAL OF PROPORTIONATE ITC IN RESPECT OF EXEMPTED SUPPLIES, NON BUSINESS PURPOSE USE
-Non business, non taxable or exempt supplies not qualified for credit. It would add up to resistance of Rule 42 and 43 of the CGST Rules. supplies, where rate notice limits availment of ITC (eg restaurant) will be treated as excluded supplies for the purposes of calculation of ITC inversion under Rule 42 and 43 of CGST Rules.
10. NON AVAILMENT OF ITC ON BANK CHARGES
-ITC could be benefited as there is no particular limitation U/S 17(5)
11. NON REVERSAL OF ITC IN RESPECT OF GOODS LOST, STOLEN, DESTROYED, WRITTEN OFF OR DISTRIBUTED AS GIFTS/FREE SAMPLES
-Where ITC is benefited and afterward the goods lost, stolen, crushed, discounted or dispersed as gifts/free examples, ITC must be switched with interest.
-Discounted could mean completely discounted and consequently arrangement may not affect this.
-Information decimated before putting into the production procedure would be covered.
-Information sent as samples are covered in this segment. Data sources contained in final items would not be affected.
12. Delay IN AVAILING ITC
-Avail the ITC on monthly premise and use for payment of output obligation
-ITC of F.Y 2017-18 can’t be asserted after 30th April 2019.
For further information on this or in case of any queries, please contact Certicom Consulting.