Some Pratical issues of ITC other than Block credit:


Some Pratical issues of ITC other than Block credit:

According to section 17(5) of CGST Act following are the list of one may cannot eligible to take credit.

(a) Motor vehicles & Conveyance except in some cases defined in the act

(b) Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except in some cases defined in the act

(c) Membership of club, health & fitness center.

(d) Rent a cab, life insurance and health insurance except in some cases defined in the act

(e) Travel benefits to employees on vacation such as Leave travel concession or home travel concession e.g. foreign trip provided to employee on leave.

(f) Works contract services for construction of immovable property except in some cases defined in the act

Some Pratical problems:

Other than above, there are some input tax credit which anyone cannot be allowed to set off against output GST payable.

Example-1: If the dealer of Maharashtra purchase some item from Gujrat and Gujrat dealer has charged the GST as intrastate purchase because of place of supply. Can Maharashtra dealer is able to take credit of transaction?

Ans: No, Maharashtra dealer cannot be able to take credit of such transaction, because Gujrat dealer has charged Gujrat GST & CGST on such transaction and Maharashtra dealer can take credit only of Maharashtra GST & GST and IGST only.

Even though, on the bill of purchase it is mentioned SGST & CGST but Maharashtra dealer cannot avail the credit because such credit pertains to Gujrat Government and not to Maharashtra Government.

Example-2: If Maharashtra dealer has availed the service of immovable property which is situated at Delhi and service provider is also located at Delhi. Whether GST on such transaction is eligible?

Ans: According to place of supply rule, Delhi dealer will charged the Delhi GST and CGST. And again Maharashtra dealer is unable to take the credit of such transaction.

So before taking or claiming the claim under GST, one must understand that whether GST charged on such transaction is eligible for credit? And then only take the credit. If anyone avail wrong credit then its reversal is necessary along with interest.