Benefit of ITC at the Time of GST Registration - Section 18(1) of CGST Act, 2017
Scope
This discussion covers ITC benefits under section 18 (1) of the Central Goods and Services Tax (CGST) Act, which allows a person applying for registration to take credit of input tax related to goods held in stock when he was unregistered. This credit pertains to inputs held in stock, semi-finished or finished goods and capital goods held on day before applying. The benefit is also available to voluntary registration under section 25(3) of the CGST Act. Benefit and conditions are given in below table
| Clause | Date on which Goods held to be checked | Components related to which ITC is available | Description of person to whom such ITC is available |
|---|---|---|---|
| (a) | Day immediately preceding the date from which he becomes liable to pay tax | Inputs held in stock and inputs contained in semi-finished or finished goods held in stock | Person who applied for registration within thirty days of becoming liable and has been granted registration under this Act |
| (b) | Day immediately preceding the date of grant of registration | Inputs held in stock and inputs contained in semi-finished or finished goods held in stock | Voluntary registration under sub-section (3) of section 25 |
| (c) | Day immediately preceding the date from which he becomes liable to pay tax under section 9 (Charging Section) | Inputs held in stock, inputs contained in semi-finished or finished goods held in stock, and on capital goods | Composition taxpayer ceasing to pay tax under section 10, subject to prescribed reductions on credit for capital goods |
| (d) | Day immediately preceding the date from which such supply becomes taxable | Inputs held in stock and inputs contained in semi-finished or finished goods held in stock relatable to the previously exempt supply, and on capital goods exclusively used for such exempt supply | Registered person where an exempt supply becomes taxable |
Action
To ensure compliance and avoid surprises during assessment/audits following steps can be taken:
- ● Identify correct clause in which you are covered.
- ● Refer rule 40 of CGST Rules, 2017 to know the eligibility and procedure to claim this benefit.
- ● Keep track of all inputs and capital goods held in stock on appropriate date along with respective invoice and other supporting documents.
- ● Submit valid form GST ITC-01 within due dates.
CA Mahipal Sharma | Partner | FCA | CISA | B.Com
Contact: +91 7023030160 | email: mahipal013@gmail.com
Share this article:
