BVG Ltd., a registered supplier of Bengaluru (Karnataka), is a manufacturer and trader of goods. Following information has been provided by BVG Ltd.…

CA Intermediate · Taxation · PYQS · May 2026
BVG Ltd., a registered supplier of Bengaluru (Karnataka), is a manufacturer and trader of goods. Following information has been provided by BVG Ltd. pertaining to GST on inward supplies during the month of October 2025: Sr. No. Particulars GST (₹) (i) Purchased raw material which has been used for zero rated supply. 70,000 (ii) Works contract service for making foundation and structural support to plant and machinery which has been capitalised in the books. 10,250 (iii) Purchase of raw material from M/s. Amber Enterprises Pvt. Ltd., registered in the State of Punjab. (It includes the GST of 40,000 on raw material purchased on 15-03-2025, but the invoices were uploaded in GSTR-1 on 27-10-2025 and such details were communicated to the recipient in Form GSTR-2B.) 4,00,000 (iv) Purchased a new truck from a dealer in Bengaluru (Karnataka) for transport of raw material. BVG Ltd. claimed depreciation under the Income-tax Act, 1961 on the value of new truck purchased including all applicable taxes. 12,00,000 (v) BVG Ltd. ordered 3 independent orders for tools to be used in repair of machine to ABG Ltd which consists GST of 1,00,000 for each order, the tools will be delivered in various lots. However, out of these 3rd orders, tools for 2 orders were delivered in the month of October 2025 whereas 50% of the tools for the 3rd order had been delivered in the month of October 2025 and remaining 50% were delivered in the month of November 2025, although GST had already been paid for all orders. 3,00,000 Other information: All the above inward supplies except at Sr. No. (i) above have been used in the manufacture of taxable goods. Inward supplies at Sr. No. (i) above have been used in the manufacture of exempt goods. Annual return for the financial year 2024-25 has been filed on 25/10/2025. Ignore the bifurcation of the CGST, SGST and IGST. Subject to the information given above, assume that all the other conditions necessary for availing ITC have been complied with. Compute the amount of total eligible Input Tax Credit (ITC) that can be availed by BVG Ltd. in the month of October 2025, with necessary explanations for the treatment of each item separately as per the provisions of the GST Law.

Suggested Answer and Working Notes:

Computation of total eligible ITC that can be availed by BVG Ltd. Particulars Amount of eligible ITC (₹) Raw material used for zero-rated supply 70,000 Works contract service [Plant and machinery includes foundation and structural support to it. Thus, in given case, ITC on works contract services availed for construction of plant and machinery is allowed.] 10,250 Purchase raw material from Amber Enterprises Pvt. Ltd. [ITC on an invoice can be availed only upto earliest of: 30th November of subsequent financial year or Date of filing the annual return, i.e. 25.10.2025, in given case. Since the invoice of GST of 40,000 of raw material purchased on 15-03-2025 is uploaded in GSTR-1 after 25.10.2025, ITC on said invoice is not allowed.] 3,60,000 Purchase of new truck for transport of raw material [Since depreciation has been claimed under the Income-tax Act, 1961 on GST component of the truck, ITC of same is not allowed.] Nil Tools purchased under 3 independent orders [In October, ITC is admissible only for two orders that were fully received and not on third order since 50% of third order (second lot) was delivered in the month of November and ITC is available only upon receipt of final lot/installment.] 2,00,000 Total eligible ITC 6,40,250

Topics: Paper 3B: Goods and Services Tax

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