Page 32 - Chap7 ITC

(iv) GST liability of the company payable through Electronic Cash Ledger, for the month of October if opening
balance of ITC is nil.

Note: Assume that all the procurements made by the company are from States other than Uttar Pradesh.
Similarly, the company sells all its products in States other than Uttar Pradesh. Rate of IGST is 18%. Subject to
the information given above, assume that all the conditions necessary for availing the ITC have been complied
with. Ignore interest, if any and make suitable assumptions wherever required.
[CA Final RTP May 19, Nov 20(Similar)] [CA Final MTP Oct 23][Study Mat]
Answer:- Amount of ITC credited to Electronic Credit Ledger for the month of October:-

Particulars Eligibility IGST (₹) Remarks

Capital goods U Yes 36,000 ITC in respect of capital goods used commonly for
effecting taxable supplies and exempt supplies
denoted as ‘A’ shall be credited to the electronic
credit ledger [Rule 43(1)(c)].

Capital goods V Yes 18,000 ITC in respect of capital goods used or intended to be
used exclusively for effecting supplies other than
exempted supplies but including zero rated supplies shall
be credited to the electronic credit ledger [Rule 43(1)(b)].
ITC in respect of capital goods used or intended to be
Capital goods W No -
used exclusively for effecting exempt supplies shall
not be credited to electronic credit ledger [Rule 43(1)
(a)].

Capital goods X Credit on capital Yes 90,000 At the time of purchase, as the capital goods is used for
goods exclusively used earlier for exclusively for exempt supplies, full ITC is not eligible
supplying exempted goods and therefore not claimed. Now commonly used for
taxable as well as exempt supplies hence reversal to be
computed as per rule for remaining useful life.
Capital goods Y Credit on capital No - Machinery ‘Y’ is being used for effecting both
goods exclusively used earlier for taxable and exempt supplies from 1st October. Prior
supplying taxable goods to that it was exclusively used for effecting taxable
supplies. Therefore, ITC in respect of such
machinery would have already been credited to the
electronic credit ledger.

Capital goods Z No - Machinery ‘Z’ is being used for effecting both
taxable and exempt supplies from 1st October two
years ago. Therefore, ITC in respect of such
machinery would have already been credited to the
electronic credit ledger.

Raw Material used for Yes 27,000 ITC in respect of inputs used for effecting taxable
manufacturing ‘Alpha’ supplies will be credited in Electronic Credit Ledger.
[Rule 42]

Raw Material used for ITC in respect of inputs used for effecting exempt
manufacturing ‘Beta’ No - supplies will not be credited in the electronic credit
ledger [Rule 42]

Raw Material used for Yes 18,000 ITC in respect of inputs used for effecting taxable
manufacturing ‘Gama’ supplies will be credited in Electronic Credit Ledger.
[Rule 42]

Total ITC credited to E-Credit ledger 1,89,000

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