Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

ITC on cash purchase.

06 May 2021

Sir I am an Accountant.From the information received from another Accountants,I know that if the dealer made the purchase for Rs.50000/- or more in cash then the dealer can not claim the ITC on his said cash purchase . Sir please guide me this information is right or not if yes which section is applicable.thanks

Reply
Follow
Share

8 Replies

CA Altamush Zafar (GST Consultant) (15971 Points)
Replied 06 May 2021

you can claim itc in gst if the invoice is valid and contains your GSTIN. But if you pay 50000 in cash you will not be able to claim expense in income tax.

Upgrade to CAclubindia Pro. Subscribe Now!

CMA Poornima Madhava (CMA) (13112 Points)
Replied 06 May 2021

As I understand, there is no such restriction to claim ITC under GST. However, such expenses cannot be claimed as deduction under Income Tax Act.

RENU SHARMA (1388 Points)
Replied 06 May 2021

Agree

Rajat Sharma (499 Points)
Replied 06 May 2021

Sir the said amount of Rs 50000/- or more paid on account of his purchase for retail sale business.Sir it is not business expenses,it is a purchase for retail trading.

CA. Sourav Sarkar (Chartered Accountant ) (24583 Points)
Replied 06 May 2021

Agreed

Upgrade to CAclubindia Pro. Subscribe Now!

Lotus Agrawal (Practice) (1361 Points)
Replied 06 May 2021

You can claim ITC if shown in GSTR-2A even if amount paid in cash but when filing return the purchase shall be disallowed as paid in cash in excess of 10000/-.

1 Like

Navin Agarwal (354 Points)
Replied 15 May 2021

Mode of payment is completely irrelevant in gst regime, its only the nature of supply is what matters!

Bhavika Kothari (CA) (1258 Points)
Replied 21 May 2021

This restriction is not there in GST but it is there in income tax. You will not be able to claim this as an expense as per Income Tax Act. This will give rise to a mismatch between expenses as per GST and expenses as per Income Tax. To avoid such differences it is always better not to make such purchases in future