08 July 2019
Respect sir, I just want to know that if we are providing transportation of goods services by hiring trucks and giving the same truck on hire basically which is not gta so we are exempt from gst liabilities in this case can we avail itc on any purchase or any service receive. and if we have claim the itc for the same what will be next thing we need to do. thank you.
09 July 2019
ok sir but in case if ITC was claimed what steps need to be taken. for example we have to reverse the itc claim and have to pay interest on amount reason we have claim wrong ITC and rate for int will be 24% instead of 18%. secondly can you provide me section under which we are unable to claim itc of exempt service. Thank you in advance
09 July 2019
You have to reverse ITC and pay interest. See the link. https://taxguru.in/goods-and-service-tax/reversal-itc-attributable-exempt-supplies-rule-4243-cgst-rules-2017simplified.html
09 July 2019
sir, what if my outward liabilities are paid by service receiver for example i'm a bank agent and my tax liabilities are paid by bank under rcm GST notification No. 15/2018 in this case can i take claim itc.
When you provide services that are exempt from GST (such as the hiring of trucks where the service falls under exemptions), you generally **cannot avail ITC on inputs or input services used to provide those exempt services**.
**Relevant Sections and Rules:**
- **Section 17(2) of the CGST Act:** This section provides that input tax credit (ITC) on inputs and input services is not allowed to the extent they are used for making exempt supplies.
- **Rule 42 and Rule 43 of the CGST Rules:** These rules deal with the apportionment and reversal of ITC where a taxpayer makes both taxable and exempt supplies.
#### 2. **Reversal of ITC and Next Steps:**
If ITC was incorrectly claimed for providing exempt services, you need to reverse the ITC and pay interest. Here’s how you should handle the situation:
1. **Reverse the ITC:** - **Calculate the Reversal Amount:** Determine the amount of ITC claimed that should have been reversed. This involves calculating the ITC related to exempt supplies based on the proportion of exempt supplies to total supplies.
2. **Pay Interest:** - **Interest Rate:** The interest rate for delayed reversal of ITC is generally 18% per annum as per Section 50(3) of the CGST Act. If an incorrect ITC was claimed, interest needs to be paid at this rate on the reversed amount.
3. **File a Rectified Return:** - **Correct the Mistake:** Amend the GST returns (such as GSTR-3B) to reflect the correct ITC reversal. Ensure to file these corrections promptly to avoid further penalties.
4. **Documentation and Compliance:** - **Maintain Records:** Keep detailed records of the ITC claimed, the reversal made, and the interest paid. This documentation is essential for future reference and audit purposes.
#### 3. **Section on ITC Reversal for Exempt Services:**
- **Section 17(2) and 17(3) of the CGST Act:** These sections explicitly state the restrictions on claiming ITC when dealing with exempt supplies.
#### 4. **ITC When Outward Liabilities are Paid by Service Receiver:**
If you are a bank agent and the bank pays your GST liabilities under Reverse Charge Mechanism (RCM) (GST Notification No. 15/2018), the following applies:
1. **ITC Eligibility:** - **ITC on Inputs and Input Services:** You can claim ITC on the inputs and input services used to provide the taxable services, even if the outward GST liabilities are paid by the service receiver under RCM.
2. **Ensure Compliance:** - **Proper Documentation:** Maintain proper documentation of the services received, the GST paid under RCM, and ensure that the ITC is claimed accurately in your GST returns.
#### **Summary:**
- **For Exempt Services:** ITC cannot be claimed on inputs or input services used for exempt services. If claimed incorrectly, it must be reversed with interest. - **For RCM Payments:** You can claim ITC on inputs and input services even if the service receiver pays GST under RCM.
### **Action Plan:**
1. **Review and Reverse ITC:** Calculate and reverse any incorrectly claimed ITC, and pay interest if applicable. 2. **File Correct Returns:** Amend your GST returns to reflect the correct ITC reversal. 3. **Maintain Documentation:** Keep all relevant records to support your claims and corrections.
By following these guidelines, you can ensure compliance and avoid further issues with GST.
CAclubindia
