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Input Tax credit available?????

26 May 2022

A brick manufacturer (normal registered taxable person)opt for paying GST at the rate of 6% regular scheme(from 01/04/2022).Apart from bricks manufacturing, he has some construction machinery/equipments, which is exclusively used for rental service. He gets input of Tax in his credit ledger by way of purchasing of spareparts and maintenance for his machinery. now....

1. What about the ITC. Is it available?

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10 Replies

sabyasachi mukherjee (27519 Points)
Replied 26 May 2022

Input tax credit is available in the following caees
1. valid tax invoice
2. regular dealer registration
3. input used in the course or furtherance of business.

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Sujit Saha (243 Points)
Replied 26 May 2022

In this context it's also to be mentioned, that, the brick manufacturer also gets ITC by way of purchasing of coal and other items that are required for brick manufacturing. As per notification no 02/2022 there is a confusion about claiming ITC. Please suggest

Sanjay K rathi (Practicing Indirect Tax and Allied laws ) (32 Points)
Replied 26 May 2022

(a) credit of input tax charged on goods or services used exclusively in supplying such goods has not been taken; and

(b) credit of input tax charged on goods or services used partly for supplying such goods and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such goods is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 (12 of 2017) and the rules made thereunder.

Friend these are condition attached with Notification No. 02/ 2022 dated 31.03.2022, wherein condition (a) categorically clarify the credit will not be available. Further clause (b) also put condition that wrt common input the same will be considered as exempt supply. Hope the same clarify your query

Sujit Saha (243 Points)
Replied 26 May 2022

Sir, thanks for your valuable suggestion, but sir, sec 17(2) is about proportional ITC.

Imthias ahamed Kormath (910 Points)
Replied 27 May 2022

He is a regular dealer in the field of bricks manufacturing.He also maintained some construction mechinery for rental service.This service not included in his registration entity by him. He can not claim ITC.Besides maintenance and spare parts will be B2B transaction, All data will be available in the Gstr 2A for the claim of ITC.otherwise itc can not claim .

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Sujit Saha (243 Points)
Replied 27 May 2022

Thanks for the valuable views. In this case, both work contract and manufacturing, both are already included in his registration as nature of business. And all the input of Tax is available in 2a, 2b as well as in the credit ledger. So what about the ITC???

Sanjay K rathi (Practicing Indirect Tax and Allied laws ) (32 Points)
Replied 27 May 2022

Wrt 17 (2) , you have to reverse the common credit in terms of section 17 (2) read with rule 42 and R 43. In respect to Input directly relatable to renting business you can claim credit . Please go through Rule 42 in detail for procedure prescribed. Thanks

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Sujit Saha (243 Points)
Replied 27 May 2022

Thanks a lot for your valuable views.

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sabyasachi mukherjee (27519 Points)
Replied 28 May 2022

Imtihas if he maintained some construction machinery then he need to hv gst.

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Imthias ahamed Kormath (910 Points)
Replied 28 May 2022

Restricted ITC not include in the supply of the goods.But it treat as an expense and it's ITC ,So,which may considered as ITC of that respective goods /service or both like as ITC of insured goods under the transportation.