Dear Reader,
On the completion of our new office premises, we have decided to hold a series of talk on different subject.Today 26th August ,2017 ; 6.00-8.00 PM Free S/o Cyber Security @B-1111,Mondeal Heights, Nr.Iscon Circle,Ahmedabad-380015 Register in Advance by SMS/WA/E-mail/Calling M. 7016637738 E-mail: nitinmpathak@gmail.com
Further in the series will be on 29th August at same time and place on GST
Further in the series will be on 2nd September at same time and place on Cyber Security
BLOCKED CREDITS UNDER GST
Generally the input tax
credit eligibility is based on whether the same is used for taxable supplies or
exempt supplies. Where the goods or service is used for both taxable and
exempted supplies, only proportionate credit is eligible to registered person
only with respect to taxable supplies.It is to be noted that Zero rated
supplies are taxable supplies and any input goods or services used for giving
such outward supplies would be eligible for credits.
ITC
based on use in furtherance in business
Input Tax credit used
for business purposes will be declared as eligible Input Tax Credit and those
used for other purposes will not be able to claim as input tax credit except
blocked credit, which are specifically provided separately.
Ineligible
Input Tax Credit/Blocked Credits
Input Tax credit shall
not be available in respect of the following:-
(i) Motor vehicleand
other conveyance except when they are used for making the following taxable
supplies, namely-
(a) Further supply of such vehicles or conveyances or
(b) Transportation of passenger or
(c) Imparting training on driving, flying, navigating such
vehicles or conveyances;
(ii) Motor vehicle and
other conveyance except used for transportation of goods
(iii) Supply of goods
and/or services such as –
(a)
food and beverages, outdoor catering, beauty treatment, health services,
cosmetic and plastic surgery except
where such supply of goods or services of each category is used for making an
outward taxable supply of the particular category of goods or services or both
or as an element of a taxable composite or mixed supply.
(b)
Membership of a club, health and fitness centre
(c)
rent-a-cab, life insurance, health insurance except where it is notified by the
Government as obligatory for an employer to provide to its employees under any
law for the time being in force; or such inward supply of goods or services or
both of a particular category is used by a registered person for making an
outward taxable supply of the same category of goods or services or both or as
part of a taxable composite or mixed supply; and
(d)
travel benefits to employees on vacation i.e. leave or home travel concession.
(iv) Works contract
services when supplied for construction of immovable property, other than plant
and machinery, except where it is for further supply of works contract service;
It
is important to note that credit of GST paid on works contract services will be
allowed only if the output is also works contract services.
(v)Goods or services
received by a taxable person for construction of an immovable property on his
own account, other than plant and machinery, even though it is used in course
or furtherance of business;
“Construction”
includes re-construction, renovation, additions or alterations or repairs, to
the extent of capitalization, to the said immovable property. Please note that
‘alterations’ and ‘repairs’ are also included in this definition.
(vi) Goods or services
or both on which the tax paid under composition scheme.
(vii) goods or services
or both received by a non-resident taxable person except on goods imported by
him.
(viii) Goods or
services or both used for personal consumption.
(ix) Goods lost,
stolen, destroyed, written off or disposed of by way of gift or free samples.
(x) Tax paid in terms
of
Section
74:-Determination of tax not paid or short paid or erroneously refunded or
input tax credit wrongly availed or utilized by reason of fraud or any willful
misstatement or suppression of facts.
Section
129:-Detention, seizure and release of goods and conveyances in transit.
Section 130:-Confiscation
of goods or conveyances and levy of penalty.
FAQ
Que:
1 What do you mean by ‘Plant and Machinery’?
Solution: The
expression plant and machinery means apparatus, equipment, and machinery fixed
to earth by foundation or structural
support that are used for making outward supply of goods or services or both
and includes such foundation and structural supports but excludes
(i)
land, building or any other civil structures;
(ii)
Telecommunication towers; and
(iii)
Pipelines laid outside the factory premises.
Que: 2 Whether taxes
paid on change of interiors of service apartment is eligible for input tax
credit?
Solution:
Input
tax credit is not available on 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. The word
construction includes reconstruction, renovation, additions or alterations or
repairs to the extent of capitalization to the said immovable property. If the
cost of interiors is capitalized towards the cost of immovable property then it
forms part of the cost of immovable property (Service apartment) and
accordingly taxes paid on change of interiors of service apartment will not be
eligible as input tax credit.
Thanking You,
CA Nitin Pathak
E-mail: nitinmpathak@gmail.com
