Section 18 of the Central Goods and Services Tax Act, 2017 deals with the provisions related to availability of input tax credit (ITC) in certain situations. It specifies the cases in which a registered person is eligible to claim ITC and the conditions for claiming such credit. The section also covers the procedure for claiming ITC and the time limit for such claim. Additionally, it provides for the recovery of Input Tax Credit in case of default or ineligibility. Overall, Section 18 plays an important role in determining the ITC entitlement of a registered person and helps in ensuring the proper utilization of tax credit.
Section 18 of the Goods and Services Tax (GST) Act covers the availability of Input Tax Credit (ITC) under special circumstances. The following topics are covered in this section:
- ITC on goods or services used for business purposes and then transferred for personal use or used for non-business purposes:
If a registered GST dealer uses goods or services for business purposes and later transfers them for personal use or uses them for non-business purposes, they are required to reverse the Input Tax Credit availed on such goods or services. However, if the dealer pays the amount of tax applicable on such goods or services, they can claim ITC on the same.
- ITC on goods or services used for business purposes but lost, stolen, destroyed, or written off:
If a registered GST dealer has availed Input Tax Credit on goods or services used for business purposes, but these goods or services are lost, stolen, destroyed, or written off due to natural causes or unavoidable circumstances, the dealer can claim ITC on the tax paid for such goods or services.
- ITC on goods or services used for both business and non-business purposes or for making taxable and exempt supplies:
If a registered GST dealer uses goods or services for both business and non-business purposes, or for making taxable and exempt supplies, they can claim ITC on the portion used for business purposes or for making taxable supplies.
- ITC on goods or services used before the registration of the taxpayer under GST:
If a registered GST dealer has purchased goods or services before the registration under GST and these goods or services are used for business purposes after registration, the dealer can claim Input Tax Credit on the tax paid on such goods or services.
- ITC on goods or services used by a non-resident taxable person:
If a non-resident taxable person has purchased goods or services in India for making taxable supplies but leaves India without registering under GST, the registered GST dealer who has supplied such goods or services can claim ITC.
- ITC on goods or services used by a composition taxpayer before opting out of the scheme:
If a taxpayer registered under the composition scheme under GST opts out of the scheme, they can claim Input Tax Credit on goods or services used for business purposes before opting out.
- ITC on goods or services used by a person who becomes liable to pay tax under reverse charge mechanism:
If a person becomes liable to pay tax under the reverse charge mechanism, they can claim ITC on the tax paid on goods or services used for business purposes.
In conclusion, Section 18 provides guidelines for claiming Input Tax Credit under special circumstances. It is important for registered GST dealers to understand these guidelines and comply with them to avoid any legal or financial repercussions.
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