Page 25 - Chap7 ITC

(vi) Freight paid to GTA for inward transportation of non-taxable items - ₹ 20,000

(vii) Monthly rent payable for the complex - ₹ 5,50,000 (one third of total space available is used for
personal residential purpose).
(viii) Activity of packing the items and putting the label of the Store along with the sale price has been
outsourced. Amount paid for packing of all the items - ₹ 2,50,000
(ix) Salary paid to the regular staff at the Store - ₹ 2,00,000

(x) GST paid on inputs used for personal purpose- ₹ 5,000
(xi) GST paid on rent a cab services availed for transportation of employees, which is not obligatory
under any law - ₹ 4,000.
(xii) GST paid on items given as free samples- ₹ 4,000
Given the above available facts, you are required to compute the following:
A. Input tax credit (ITC) credited to the Electronic Credit Ledger
B. Common Credit
C. ITC attributable towards exempt supplies out of common credit
D. Eligible ITC out of common credit

E. Net GST liability for the month of October, 20XX, if opening balance of ITC is nil.
Note:
(1) Wherever applicable, GST under reverse charge is payable @ 5% by All-in-One Stores. Rate of GST in
all other cases is 18%.
(2) All the sales and purchases made by the Store are within Maharashtra. All the purchases are made from
registered suppliers. All the other expenses incurred are also within the State.
(3) Wherever applicable, the amounts given are exclusive of taxes.
(4) All the necessary conditions for availing the ITC have been complied with. [Study Mat]
Answer:-

A. Computation of ITC credited to Electronic Credit Ledger
As per rule 42, the ITC in respect of inputs or input services being partly used for the purposes of business and
partly for other purposes, or partly used for effecting taxable supplies and partly for effecting exempt supplies,
shall be attributed to the purposes of business or for effecting taxable supplies.
ITC credited to the electronic credit ledger of registered person [‘C1’] is calculated as under-

C1 = T - (T1+T2+T3)
Where,
T = Total input tax involved on inputs and input services in a tax period.
T1 = Input tax attributable to inputs and input services intended to be used exclusively for non-business purposes
T2 = Input tax attributable to inputs and input services intended to be used exclusively for effecting exempt
supplies
T3 = Input tax in respect of inputs and input services on which credit is blocked under section 17(5)
Computation of total input tax involved [T]

Particulars Amount (₹)
GST paid on taxable items [ ₹55,00,000 x 18%] 9,90,000

Items exempted vide a notification [Since exempted, no GST is paid] Nil
Items not leviable to tax [Since non-taxable, no GST is paid] Nil
GST paid under reverse charge on freight paid to GTA for inward transportation of 5,000
taxable items - [ ₹1,00,000 x 5%]

GST paid under reverse charge on freight paid to GTA for inward transportation of 4,000
exempted items - [₹ 80,000 x 5%]

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