Good day! I kindly request clarification on the following two points regarding the availment of Import IGST (Integrated Goods and Services Tax) Input Tax Credit (ITC):
1. Can we avail ITC even if we have not paid the Duty but have the Bill of Entry (BOE) in our name? This pertains to materials received on a Delivered Duty Paid (DDP) basis, where the duty is paid by the vendor, but we are responsible for payment against the vendor invoice.
2. Can ITC be availed on Free of Cost (FOC) materials where the duty is paid by the vendor and the materials are received on an FOC basis?
I am seeking the expert views on the above matters. Thank you for your attention and assistance.
07 July 2024
### Clarification on Availment of Import IGST Input Tax Credit (ITC)
#### 1. Availing ITC for Duty Paid by Vendor on DDP Basis:
**Scenario**: Materials are received on a Delivered Duty Paid (DDP) basis, where the vendor pays the duty, but the Bill of Entry (BOE) is in the name of the recipient (your company).
**Regulation**: - As per Section 16 of the CGST Act, 2017, ITC is available to the registered person if the goods or services are used or intended to be used in the course or furtherance of business. - Rule 36(1) of the CGST Rules, 2017 specifies the documents required to avail ITC, which include the Bill of Entry or any other prescribed document.
**Key Considerations**: - **Bill of Entry**: If the Bill of Entry is in your name, it means the import is recognized as being made by your company, even if the duty is paid by the vendor. - **Payment to Vendor**: Since you are paying the vendor's invoice, it implies that the cost of duty is factored into your payment.
**Conclusion**: - **Yes, you can avail ITC** on the IGST component of the import, provided the Bill of Entry is in your name and you have paid the vendor invoice which includes the duty component. The availability of ITC is contingent on having the necessary documents and ensuring that the transaction is recorded correctly in your books of accounts.
#### 2. Availing ITC on Free of Cost (FOC) Materials:
**Scenario**: Materials are received free of cost (FOC) from the vendor, and the duty is paid by the vendor.
**Regulation**: - According to Section 16 of the CGST Act, 2017, ITC can be availed on goods and services used or intended to be used in the course or furtherance of business. - The Bill of Entry should reflect your company's name, and the goods should be intended for business use.
**Key Considerations**: - **Bill of Entry**: The BOE must be in your name, indicating the import is attributed to your company. - **Intended Use**: The goods received FOC must be used or intended to be used in the course of business. - **No Monetary Consideration**: Even if the goods are received without any monetary consideration, ITC on the IGST component paid on import can be claimed if all other conditions are met.
**Conclusion**: - **Yes, you can avail ITC** on the IGST paid on FOC materials, provided the Bill of Entry is in your name, and the materials are used for business purposes. The fact that the materials are received FOC does not impact the eligibility for ITC as long as the duty has been paid and other conditions are satisfied.
### General Advice:
- **Documentation**: Ensure that all documentation, such as the Bill of Entry and vendor invoices, is accurately maintained. - **Record Keeping**: Properly record the transactions in your accounting systems, highlighting the duty paid by the vendor and the receipt of goods. - **GST Returns**: Reflect the ITC claim accurately in your GST returns to avoid any discrepancies during audits or assessments.
Always consider consulting with a tax professional or GST expert to ensure compliance with the latest regulations and interpretations, as GST laws are subject to amendments and updates.
CAclubindia
