EXAMPLE-117

Continuing with previous example, if the M/s XYZ Ltd also has stock in capital goods purchased on 1 April, 2017 for Rs 3000000 on which Central Excise duty was paid for RS.450000. The capital goods until 31^st  December were in  use for last  9 month.

(i)                 Determine the credit eligible on capital goods on becoming a regular taxable person.

(ii)               As the credit claim increases from 2 lakh whether any other requirement with submission of declaration in FORM GST ITC-01.

Answer

(i)                 According to section 18 registered taxable person also entitled to take credit of capital goods along with inputs held in stock on the day immediately preceding the date from which he becomes liable to pay tax under section 9.

Rule (5) of ITC rule specifies that ITC on capital goods shall be claimed after reducing the tax paid on capital goods by 5% points per quarter or part thereof from the date of invoice or tax paying documents.

  Capital goods had been in use for 9 month.

Used life in quarters = 3 quarter

Input tax credit available = 450000- [450000* (3*5%)]

                                         = Rs. 382500

  Total claim of credit in declaration for input and capital goods =165000+ 382500 = Rs. 547500.  Credit on capital goods and input is available as according to section 18(2) as  invoice on capital goods and input goods are not older than one year.

(ii) Rule40(1) (d) of Chapter V of CGST Rules,2017 specify that declaration in FORM GST ITC-01 shall be certified by CA if aggregate value of claim exceeds 2 Lakh, thus in the given case certification is needed.