Availability of Input Tax Credit on the Purchases made before GST Registration

Its a com­mon myth among the Tax pay­ers that Input tax could only be avail­able on the pur­chas­es made after GST Reg­is­tra­tion. How ever in cer­tain cas­es Input can be tak­en on the pur­chas­es pre Reg­is­tra­tion:

As per Sec­tion 18(1) of CGST Acts 2017:

  • a per­son who has applied for reg­is­tra­tion under this Act with­in thir­ty days from the date on which he becomes liable to reg­is­tra­tion and has been grant­ed such reg­is­tra­tion shall be enti­tled to take cred­it of input tax in respect of inputs held in stock and inputs con­tained in semi-fin­ished or fin­ished goods held in stock on the day imme­di­ate­ly pre­ced­ing the date from which he becomes liable to pay tax under the pro­vi­sions of this Act;
  • a per­son who takes reg­is­tra­tion under sub-sec­tion (3) of sec­tion 25 shall be enti­tled to take cred­it of input tax in respect of inputs held in stock and inputs con­tained in semi-fin­ished or fin­ished goods held in stock on the day imme­di­ate­ly pre­ced­ing the date of grant of reg­is­tra­tion;
  • where any reg­is­tered per­son ceas­es to pay tax under sec­tion 10, he shall be enti­tled to take cred­it of input tax in respect of inputs held in stock, inputs con­tained in semi-fin­ished or fin­ished goods held in stock and on cap­i­tal goods on the day imme­di­ate­ly pre­ced­ing the date from which he becomes liable to pay tax under sec­tion 9:

Pro­vid­ed that the cred­it on cap­i­tal goods shall be reduced by such per­cent­age points as may be pre­scribed;

  • where an exempt sup­ply of goods or ser­vices or both by a reg­is­tered per­son becomes a tax­able sup­ply, such per­son shall be enti­tled to take cred­it of input tax in respect 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 the day imme­di­ate­ly pre­ced­ing the date from which such sup­ply becomes tax­able:

Pro­vid­ed that the cred­it on cap­i­tal goods shall be reduced by such per­cent­age points as may be pre­scribed.

How­ev­er, A reg­is­tered per­son shall not be enti­tled to take input tax cred­it as detailed above in respect of any sup­ply of goods or ser­vices or both to him after the expiry of one year from the date of issue of tax invoice relat­ing to such sup­ply.

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