Arvind Cables & Components Pvt. Ltd. makes electrical switchgear components at its factory in Pune, Maharashtra, which is registered under the…

Computation of ITC available for the tax period S. No. Particulars CGST* ₹ SGST* ₹ IGST* ₹ Total ₹ 1. Opening balance of ITC 15,000 8,000 9,000 32,000 2. Raw Material Raw material purchased from Gujarat [Refer Note 1(i)] 14,400 14,400 Raw material imported from Vietnam [Refer Note 1(ii)] 29,970 29,970 Raw material purchased from unregistered suppliers within Maharashtra [Refer Note 1(iii)] Nil Nil Nil Raw material destroyed due to seepage [Refer Note 1(iv)] Nil Nil Nil Remaining raw material purchased from Maharashtra [Refer Note 1(i)] [₹3.5 – ₹1.5 – ₹0.80 – ₹0.30 – ₹0.05] = ₹0.85] 7,650 7,650 15,300 Total ITC for raw material 7,650 7,650 44,370 59,670 3. Consumables [Refer Note 2] 9,000 9,000 18,000 4. Transportation charges for bringing the raw material to factory [Refer Note 3] 1,500 1,500 3,000 5. Salary paid to employees on rolls [Refer Note 4] Nil Nil Nil Nil 6. Premium paid on life insurance policies taken for specified employees [Refer Note 5] 14,400 14,400 - 28,800 7. Audit fee [Refer Note 6] 4,500 4,500 - 9,000 8. Telephone expenses [Refer Note 6] 2,700 2,700 - 5,400 9. Bank charges [Refer Note 6] 900 900 - 1,800 Total ITC available for the tax period 55,650 48,650 53,370 1,57,670 Computation of net GST payable by Arvind Cables & Components Pvt. Ltd. Particulars CGST* ₹ SGST* ₹ IGST* ₹ Total ₹ On Intra-state sales in Maharashtra 63,000 63,000 1,26,000 On Inter-state sales other than Maharashtra 54,000 54,000 On exports under LUT [Note 7] Nil Nil Nil Nil Total output tax liability 63,000 63,000 54,000 1,80,000 Less: ITC available for being set off [Note 8 and Note 9] (55,650) (48,650) (53,370) (1,57,670) Net GST payable from Electronic Cash Ledger [A] 7,350 14,350 630 22,330 GST payable on inward supply of GTA services under reverse charge through Electronic Cash Ledger [Note 3 and 10] [B] 1,500 1,500 3,000 Net GST payable through Electronic Cash Ledger [A] + [B] 8,850 15,850 630 25,330 Notes: (1) (i) Credit of input tax (CGST & SGST/ IGST) paid on raw materials used in the course or furtherance of business is available in terms of section 16(1). (ii) IGST paid on imported goods qualifies as input tax in terms of section 2(62)(a). Therefore, credit of IGST paid on imported raw materials used in the course or furtherance of business is available in terms of section 16(1). Further, since ITC of basic customs duty and social welfare surcharge is not available, same are added to the cost of goods imported, i.e., ₹1,66,500 [1,50,000 + 15,000 + 1,500]. (iii) Tax on intra-State procurements made by a registered person from an unregistered supplier is levied only on notified categories of goods and services. (iv) ITC is not available on destroyed inputs in terms of section 17(5)(h). 2. Consumables, being inputs used in the course or furtherance of business, input tax credit is available on the same in terms of section 16(1). However, levy of CGST on diesel has been deferred till such date as may be notified by the Government on recommendations of the GST Council [Section 9(2)]. Hence, there being no levy of GST on diesel, there cannot be any ITC. 3. GST is payable under reverse charge on transportation service received from GTA. Tax payable under section 9(3) of the CGST/SGST Act qualifies as input tax in terms of clauses (b) and (d) of section 2(62). Thus, input tax paid under reverse charge on GTA service will be available as ITC in terms of section 16(1) as the said service is used in course or furtherance of business. Furthermore, intra-State services by way of transportation of goods by road except the services of a GTA and a courier agency are exempt from CGST vide Notification No. 12/2017 CT (R) dated 28.06.2017. Therefore, since no GST is paid on such services, there cannot be any ITC on such services. 4. Services by employees to employer in the course of or in relation to his employment is not a supply in terms of section 7 read with para 1 of Schedule III to the CGST Act. Therefore, since no GST is paid on such services, there cannot be any ITC on such services 5. ITC on supply of life insurance service is not blocked if it is obligatory for an employer to provide such service to its employees under any law for the time being in force. [Proviso to section 17(5)(b)]. Therefore, GST paid on premium for life insurance policies will be available as ITC in terms of section 16(1) as the said service is used in the course or furtherance of business. 6. Audit fee, telephone expenses and bank charges are all services used in the course or furtherance of business and thus, credit of input tax paid on such service will be available in terms of section 16(1). 7. Export of goods is a zero rated supply in terms of section 16(1)(a) of the IGST Act. A zero rated supply under LUT is made without payment of integrated tax [Section 16(3)(a) of the IGST Act]. 8. Since export of goods is a zero rated supply, there will be no apportionment of ITC and full credit will be available [Section 16 of the IGST Act read with section 17(2) of the CGST Act]. 9. As per section 49(5) read with rule 88A, ITC of- (i) IGST is utilised towards payment of IGST first and then CGST and SGST in any proportion and in any order. (ii) CGST is utilised towards payment of CGST and IGST in that order. ITC of CGST shall be utilized only after ITC of IGST has been utilised fully. (iii) SGST is utilised towards payment of SGST and IGST in that order. ITC of SGST shall be utilized only after ITC of IGST has been utilised fully. 10. Section 49(4) lays down that the amount available in the electronic credit ledger may be used for making payment towards output tax. However, tax payable under reverse charge is not an output tax in terms of section 2(82). Therefore, tax payable under reverse charge cannot be set off against the ITC and thus, will have to be paid in cash. *11. CGST and SGST are chargeable on intra-State inward and outward supplies and IGST is chargeable on inter-State inward and outward supplies.