Today we will discuss the credit structure in GST. what are the taxes in the GST and how the credit will be available?
Also in this blog, we will discuss how current tax credit lying in stock can be taken in the GST.
Credit Structure in GST
There will be three tax in GST – CGST, IGST and SGST
Credit of CGST can be taken and utilised against IGST
Credit of SGST can be taken and utilised against IGST
CGST credit cannot be taken and utilised against SGST.
Input tax credit in GST
There are Three type of input credit used in GST –
Inputs goods – Any goods other than capital goods used or intended to be used for making outward supply in the course or furtherance of business.
Capital goods – Capital goods covered in chapter 82,84 and 90 of excise act
Input services – Any Service used or intended to be used for making outward supply in the course or furtherance of business.
Note – GST council has the power to exclude certain goods and service from input credit.
Ineligibility of Input tax credit in GST
ITC after expiry of 1 year
Input tax credit will not be available from the expiry of one year from the date of issue of tax invoice. this limit of 1 year will only on availing the credit there will be no limit on utilisation of credit.
Supply is used partly for business and partly for personal
Input tax credit will not be available to the extent supply used for the personal purpose.
Supply is used for Zero rated and Exempt
Input tax credit will not be available to the extent supply used for the Zero rated and Exempt
Service used for Consumption of employee
Input tax credit will not be available to the extent supply used for theConsumption of employee example – catering service in corporate.
Composition Levy
A person discharging tax liability under composition scheme can not transfer the credit.
Goods receive in instalment/lots against an invoice –
Input tax credit in GST will be available on the receipt of last lots.
Other Condition –
Need proper invoice
Goods should be received
Supplier has paid the GST tax in cash or by utilisation of input credit
GST return has been filed.
Can we pay interest penalty and Fine Using ITC?
No, Interest penalty and Fine to be paid in cash under GST, Credit cannot be utilised for paying the same.
Carry forward of current Input tax credit of VAT/CST/ service tax and Excise
This is a very good scheme in GST for the dealer who is not registered in current law but taken registration in GST law.
| Dealer | Eligible credit | Condition |
| Who was not liable for registration under earlier law – (May be due to not cross the threshold limit)Engaged in manufacturing of exempt goodsRegistered under composition schemes in earlier law | Input held in Stock (Raw material, finished or semi-finished goods )on an appointed day | Intended to be used for making taxable suppliesInput tax credit not availed in earlier lawNot paying Composition tax in GSTInvoice pertaining to credit is not older than 12 months immediately preceding appointed day |
