11 September 2016
Electronic Input tax credit ledger: All the input taxes under various major heads i.e. CGST, SGST and IGST shall be credited to electronic ledger also known as Input tax credit or ITC ledger in the following situations: (All or any of them will form part of ITC ledger) • ITC for taxes paid on Inward supplies from registered taxpayers • ITC available to unit based on the distribution of credit done by the ISD as per manner prescribed in section 19 of the Draft law • Permissible ITC on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which the taxpayer becomes liable to pay tax, provided he applies for registration within 30 days from the date of its liability • Permissible ITC on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day of conversion from compounding taxpayer to normal taxpayer • ITC w.r.to taxes paid under reverse charge shall be credited to the Electronic credit ledger also known as Input tax credit ledger of the Taxpayer. • Other important points: (As per Draft Model Law) • If the goods and/or services are used by the registered taxable person partly for the purpose of his business and partly for any other purposes, the amount of credit shall be allowed for the goods and/or services used for the purpose of his business. • If the goods and / or services are used by the registered taxable person partly for effecting taxable supplies and partly for effecting non-taxable supplies which are exempt and not zero-rated, the amount of credit shall be restricted to so much of the input tax as is attributable to the taxable supplies including zero-rated supplies. • In cases of change in the constitution of business of the registered taxable person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provision for transfer of liabilities, the said registered taxable person shall be allowed to transfer the input tax credit that remains unutilized in its books of accounts to such sold, merged, demerged, amalgamated, leased or transferred business in the manner prescribed. • Input tax credit shall be available on provisional basis even when the supplier has not paid tax for a particular tax invoice.
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