Page 16 - Ch_10 ITC

certificate from practicing Chartered Accountant/Cost Accountant certifying that the change in

constitution has been done with a specific provision for transfer of liabilities.
Ü Upon acceptance of details by transferee on common portal, the unutilized ITC gets credited to his
electronic credit ledger.
Ü Transferee should record the inputs and capital goods so transferred in his books of account.
(iii) Ü As per section 18(1)(c) of CGST Act, 'AB' is eligible for ITC on inputs held in stock and inputs

contained in semi- finished or in finished goods held in stock and capital goods as on 30th July.
Ü ITC on capital goods will be reduced by 5% per quarter or part thereof from the date of invoice.

CCP 09.07.24.00
ABC Co. Ltd., registered under GST is engaged in the manufacture of heavy machinery. It procured the
following items during the month of July.
S.No. Items GST

1 Electrical transformers to be used in the manufacturing process 5,20,000
2 Trucks used for the transport of raw material 1,00,000
3 Raw material to be received in August 2,00,000
4 Confectionery items. These items were supplied free of cost to the customers in a 25,000
customer meet organized by the company

5 Capital Goods (Invoice missing for one out of 5 items & GST paid on the same was 5,00,000
₹ 70,000)
6 GST paid on health insurance policies 80,000
Determine the amount of ITC available with ABC Co. Ltd., for the month of July by giving necessary
explanations for treatment of various items. Subject to the information given above, assume that all

the other conditions necessary for availing ITC have been fulfilled.
[Study Mat] [CA IPCC Nov 20 Exam (Similar)]
Answer:-

Computation of ITC available with ABC Co. Ltd. for the month of July:-
S.No. Particulars GST(`) Explanation
1 Electrical transformers to be used 5,20,000 ITC is available on goods used in the course or
in the manufacturing process furtherance of business u/s 16(1) of CGST Act.

2 Trucks used to transport of raw 1,00,000 ITC is not blocked u/s 17(5)(a) of CGST Act on motor
material vehicles used for transportation of goods.
3 Raw material - Since raw material is not received in July, 20XX, ITC
for the same cannot be availed in July, 20XX u/s 16(2).
4 Confectionery items for - ITC is blocked u/s 17(5)(b) of CGST Act on food or

consumption of customers at beverages unless the same is used for making outward
customers meet taxable supply of the same category or as an element
of the taxable composite or mixed supply or provided

by an employer to its employees under a statutory
obligation.
5 Capital Goods 4,30,000 ITC can be availed only on basis of a valid document
u/s 16(2). Thus, ITC for the item for which invoice is

missing cannot be availed (i.e. for Rs. 70000).

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