SIR,
ASSESSES IS PROPRIETOR
AND DEALS IN AGRO PRODUCT [ INCLUDES TAXABLE AND NIL RATED SUPPLY AND PURCHASE]
ALSO HAVE RENT INCOME [ TAXABLE SERVICE]
IF HE
PURCHASES AC FOR HIS OFFICE, AND TAKE BILL ON HIS PROPRIETARY FIRM NAME THEN IS
HE ELIGIBLE TO CLAIM ITC ON AC PURCHASE.??
Reply
Dear Sir,
As per sub rule (1) of Rule 43
of CGST rules 2017, Subject to the provisions of sub-section (3) of section 16,
the input tax credit in respect of capital goods, which attract the provisions
of sub-sections (1) and (2) of section 17, being partly used for
effecting taxable supplies including zero rated supplies and
partly for effecting exempt supplies, shall be attributed to the
purposes of business or for effecting taxable supplies in the following
manner:-
Firstly the taxpayer is allowed to
take full credit in respect of purchase of capital goods in the relevant month,
and after that the amount ITC attributable to exempted supplies shall, during
every tax period of the useful life of the concerned capital goods, be added to
the output tax liability of such taxpayer.
Value of ineligible
credit or credit attributable
= (E÷ F) x Tr
to exempted supply
= 5,00,000 x 1000
10,00,000
= Rs. 500 (ITC of
Rs. 500 has to be reversed
monthly until completion of five years
from the date of purchase of capital
goods)
1.
Suppose amount of ITC received on purchase of AC or any
capital goods is Rs. 60,000
2.
"Tr"— Rs. 1000 [60,000/60
(12 x 5)] Useful life of such goods shall
be taken as five years
3.
"E"—aggregate value of
exempt supplies made during the tax period is Rs. 5,00,000
4.
"F"—total turnover of the
registered person during the tax period is Rs. 10,00,000