Page 13 - Ch_10 ITC

CCP 10.04.18.00
What is the ITC entitlement of a newly registered person? [CA Inter MTP March 22] [Study Mat]

Answer:
Ü As per section 18(1)(a) of CGST Act, if a person who is liable to take registration has applied for
registration within 30 days from the date on which he became liable to registration, he can take
- ITC of inputs held in stock & inputs contained in semi- finished or in finished goods held in stock on the

day immediately preceding the date on which he became liable to pay tax.
Ü As per section 18(1)(b) of CGST Act, a person applying for registration voluntarily can take
- ITC of inputs held in stock and inputs contained in semi- finished or in finished goods held in stock on the
day immediately preceding the date of grant of registration.

CCP 10.04.19.00
Mamta Sales trades in exempt goods and provides taxable services. It is registered under GST. On 1st
October, the exemption available on its goods gets withdrawn. Analyze the scenario and determine the

eligibility of Mamta Sales for availing ITC, if any, on inputs and/or capital goods used in the supply of
exempt goods. [CA Inter RTP Nov 2020] [Study Mat]
Answer:-
Legal Provision:-

Ü As per section 18(1)(d) of CGST Act, registered person whose exempt supply becomes taxable supply can
take ITC of:-
† Inputs held in stock, Inputs contained in semi-finished or in finished goods held in stock relatable to such
exempt supply &
† on capital goods exclusively used for such exempt supply

on the day immediately preceding the date from which such supply becomes taxable.
Ü ITC on capital goods will be reduced by 5% per quarter or part thereof from the date of invoice.
Discussion & Conclusion:-
Ü In given case, Mamta Sales is a registered person whose exempt supply is becoming taxable supply.

Ü Thus, as per section 18(1)(d), it can take ITC of inputs held in stock and inputs contained in semi-finished
or finished goods held in stock relatable to such exempt supply and on capital goods exclusively used for
such exempt supply on 30th September.

Sec 18(6):- Supply of Capital Goods or Plant & Machinery on which ITC is taken
CCP 10.04.20.00

What is the tax implication of supply of capital goods by a registered person who had taken ITC on such
capital goods? [Study Mat] [CA Inter MTP April 22]
Answer:-
Ü As per section 18(6) of CGST Act, if capital goods or plant & machinery on which ITC has been taken are
supplied outward by registered person, then he must pay an amount which is higher of:-

† ITC taken on such goods reduced by 5% per quarter or part thereof from the date of issue of invoice OR
† Tax on transaction value of such goods determined u/s 15.
Ü However, if refractory bricks, moulds & dies, jigs & fixtures are supplied as scrap, person may pay tax on
transaction value of such goods determined u/s 15.

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