CHAPTER: INPUT TAX CREDIT

3.1 The Cascading Effect

The ultimate objective of a tax payer is to find his tax liability within law framework. Calculate
GST liability without the understanding the concept of input tax credit is similar to a firing in
empty. The biggest problem of earlier tax systems was the cascading effect i.e., tax on tax. By
introducing the concept of input tax credit, the law has tried to reduce cascading effect. Let us
understand first what the cascading effect is all about. Suppose that there are three business
firms A, B, and C. Further, suppose that we are in the times of Sales Tax.
A sells goods to B and it quotes the price ₹ 10,000 plus 10% sales tax, then A prepares the
following tax invoice/retail invoice (in layman language it is a bill). So, A collects ₹ 11,000
(including the sales tax) from B, and he deposits the sales tax of ₹ 1,000 to the government.
Now, B receives the goods and adds some value to them worth ₹ 5,000. It sells the goods to C
at sales price ₹ 16,000 plus 10% sales tax. Therefore, B collects ₹ 17,600 (including sales tax)
from C and deposits the sales tax of ₹ 1,600 to the government.
Summary of the Above Transactions
Invoice issued by A to B Amount Invoice issued by B to C Amount (in
(in ₹) ₹)
Cost of purchase - Cost of purchase 11,000
Add: Value addition 10,000 Add: Value addition 5,000
Sales price 10,000 Sales Price 16,000
Add: Sales Tax @ 10% of Sales price 1,000 Add: Sales Tax @ 10% of Sales price 1,600
Invoice price 11,000 Invoice price 17,600

Total Sales Tax Collection by Government

Components Amount (in ₹)
Sales tax deposited by A 1,000
Sales tax deposited by B 1,600
Toal sales tax collection 2,600

Now, see the break-up of the sales tax ₹ 1600 (as shown below) collected by B from C.
₹ 1600 = 10% × ₹16,000
= 10% × (₹11,000 + ₹ 5,000)
= 10% × (₹10,000 + ₹1,000 + ₹ 5,000)

= (10% × ₹10,000) + (10% × ₹1,000) + (10% × ₹ 5,000)

Sales Sales
Tax Tax
Rate

Cascading effect = ₹ 100 = Sales Tax on Sales Tax

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Therefore, out of sales tax of ₹ 1600, there is sales tax of ₹ 100 on sales tax paid by B to A.
This is known as cascading effect. This cascading effect becomes more bigger when the
number of firms increases in the above chain of supply. Now a question arises here i.e., is
cascading effect philosophically and legally justified? The answer is No! Another question
is what is the impact of the cascading effect on inflation? The answer is that it increases the
price of the good under question. Think, if there were no cascading effect, then what would
have been the invoice price? The answer is ₹17,500.
3.2 Calculation of GST liability

The following format can be used to calculate the GST liability.

Particulars Amount
GST Collected (Also known as output tax) ---
Less: Input Tax Credit (ITC i.e., the tax paid on inward supply) ---
GST liability ---

3.3 Order of Utilisation of Input Tax Credit

According the circular issued by CBEC dated 23rd April 2019 but effective from 1st February,
2019, the following order is followed while using the input tax credit.
Output Tax
Input Tax IGST CGST SGST/UTGST
IGST I II (in any order and in any ratio)
IGST credit must be zero before utilizing CGST/SGST/UTGST.
CGST II I Not allowed
SGST/UTGST II Not allowed I

Analysis of the table

1. IGST credit can be used to pay IGST first, thereafter CGST and SGST in any order and
in any ratio.
2. IGST must be completely used compulsorily before using the credit of
CGST/SGST/UTGST.
3. CGST credit can be used to pay CGST first, thereafter to pay IGST. Further, CGST
cannot be used to pay SGST/UTGST.
4. SGST/UTGST can be used to pay SGST/UTGST first, thereafter to pay IGST. Further,
SGST cannot be used to pay CGST.
3.4 Conditions and Eligibility of Input Tax Credit
Section 16 of the CGST Act, 2017 lays down the conditions and eligibility of availing input
tax credit.
Section 16(1) – As per this section, a registered person shall be entitled to the credit for the
GST paid on the goods or services or both provided that such inputs are used for business or
furtherance of business. Such input tax credit is credited to the electronic credit ledger.

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Section 16(2) – As per this section the following four conditions must be satisfied to avail the
input tax credit.
a) The registered person must be in possession of an invoice/debit note issued by a
supplier registered under the GST Act or other such tax paying document as may be
specified. Moreover, the supplier has furnished the details of such invoice or debit note
and communicated to the recipient in specified manner.
b) The registered person has received the goods or services or both.
Explanation 1: it shall be deemed that the taxable person has received the goods where
the goods are delivered by the supplier to a recipient or any other person on the direction
of the such registered person, whether acting as an agent or otherwise, before or during
movements of goods, either by way of transfer of documents of title to goods or
otherwise. Thus, delivery to transporter or any other person by supplier is sufficient to
take input tax credit.
Explanation 2: It shall be deemed that the taxable person has received the service
where the services are provided by the supplier to any person on the direction of and
on account of such registered person.
c) Subject to section 41 of the CGST Act, the tax charged in respect of such supply has
been actually paid to either in cash or through utilisation of tax credit admissible.
d) The registered person has filed the return under section 39.
Notes
1) If the recipient of the goods or services or both does not pay the invoice amount
including tax within 180 days counted from the date of invoice, then the ITC availed
shall be reversed. Further, such reversed ITC is added to the output GST liability of the
month in which the period of 180 days is over.
2) Reversal of ITC attracts interest also at the rate notified under section 50(1) of the
CGST Act, 2017 i.e., 18% p.a. This interest is calculated from the date of availment of
the tax credit till the date of payment referred to in note 1.
3) Where the goods against an invoice are received in lots or instalments, the registered
taxable person shall be entitled to the credit upon receipt of the last lot or instalment.
Section 16(3) – If the registered person claims depreciation on the GST paid on a capital good
under section 32 of the Income Tax Act,1961, then such GST paid cannot be claimed for the
tax credit. However, the depreciation is claimed exclusive of the GST component, then the
credit can be taken under the GST Act.
Section 16(4) – This section states that the credit for a particular invoice can be claimed upto
the date whichever is earlier of the following two dates:
a. The due date of filing GST return for the month of September from the end of the
financial year to which such invoice or debit note belongs to or
b. Date of filing annual return i.e., 31st December.
3.5 Apportionment of Input Tax Credit
Section 17(1) – Where the goods or services or both are used by the registered person partly for the
purpose of any business and partly for other purposes, the amount of credit shall be restricted to so
much of the input tax credit as is attributable to the purposes of his business. As per this section, if an

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input (being good or service or both) is used for business purpose as well as for non-business purpose,
then ITC shall be allowed related to business purpose only.

Section 17(2) – Where the goods or services or both are used by the registered person partly for
effecting taxable supply including zero rated supplies and partly for effecting exempt supplies, then the
amount of credit shall be restricted to so much of the input tax as attributable to the said taxable supplies
including zero rated supplies. As per this section, if an input (being good or service or both) is used for
taxable outward supply (including zero rated supply) as well as exempt supply, then ITC is allowed for
taxable supply only.

Notes:

1. Taxable supply means a supply of goods or services or both which is leviable to tax under
CGST Act. Taxable supply includes zero rated supply also.
2. Non-taxable supply means a supply of goods or services or both which is not leviable to tax
under CGST Act.
3. Exempt supply means supply of
a) any goods or services or both which attracts nil rate of tax or
b) which may be wholly exempt from tax under section 11 of the CGST Act or under
section 6 of the IGST Act and it includes non-taxable supply.
c) As per section 17(3), exempt supply shall include sale of land and building, sale of
securities, supplies under reverse charge mechanism. The value of exempt supply
Goods or services or both used for business purpose, then ITC is allowed non-business
purpose, then ITC is not allowed Goods or services or both used for effecting Taxable
supply (including zero rated supply, then ITC is allowed Exempt supply, then ITC is
not allowed 3 shall be the stamp duty in case of land and building, 1% of the sale value
in case of sale of securities.
4. Zero rated supply means export of goods or services or both; supplies to SEZ unit or SEZ
developer.

Rule 42(1): Manner of determination of ITC in respect of inputs or input services Rule 42 states the
manner in which the tax credit under section 17(1) and section 17(2) in respect of inputs or input
services used be allowed. As per the rule the following calculations should be done.

▪ T = Total input tax credit. T is further classified into four parts:

o T1= Input tax on the inputs exclusively used for non-business purpose.
o T2 = Input tax on the inputs exclusively used for exempt supply
o T3 = Input tax blocked i.e., blocked credit under section 17(5)
o C1 = T – T1- T2-T3. C1 is further classified into two parts i.e., T4, and C2.
▪ T4 = Input tax on the inputs exclusively used for taxable supply.
▪ C2 = C1- T4. This is known as common credit. C2 is further classified into three parts i.e., D1,
D2, and C3.
o D1 = (Exempt supply X C2) / Total turnover
o D2 = 5% of C2 provided common inputs and input services are used partly for business
and partly for non-business purposes.
o C3 = C2 – D1 – D2 Credit allowed or disallowed.

Note: Rule 42(1) should be applied in respect of CGST, SGST and IGST separately.

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 Example 1: ABC, a taxable person supplies goods and services during January 20XX as per following
particulars

a. Product A – taxable under GST – turnover within India – ₹ 15 lakhs

b. Product A – taxable under GST – exports without payment of GST – ₹ 20 lakhs

c. Product B – exempt under GST – turnover ₹ 10 lakhs. His input tax details are as follows:

i. Total input tax credit in the taxable period – ₹ 4,20,000

ii. Tax on inputs and input services intended to be used exclusively for product B – ₹ 1,10,000
iii. Tax on inputs and input services intended to be used exclusively for product A – ₹ 1,20,000
Calculate the input tax credit available to ABC.

Ans. Eligible credit = ₹ 2,67,778

Example 2: XYZ, a taxable person supplies goods and services during December 2018 as per following
particulars –

1) Product A – taxable under GST – turnover within India – ₹ 20 lakhs Product A – taxable under GST
– exports without payment of GST – ₹ 5 lakhs
2) Product B – exempt from GST – turnover ₹ 10 lakhs
3) Product C – subject to excise duty but not to GST – ₹ 25 lakhs
4) Service D – taxable under GST – ₹ 5 lakhs His input tax details are as follows:

i. Total input credit in the taxable period – ₹ 4 lakhs

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 ii. Tax on inputs and input services attributable exclusively for non-business purposes – ₹
50,000 (no common input services were used for non-business purposes)
iii. Tax on inputs and input services intended to be used exclusively for effecting exempt
supply - ₹ 1 lakh.
iv. Tax on inputs and input services intended to be used exclusively for effecting taxable
supply – ₹ 1,20,000 v. Input tax credit ineligible under section 17(5) of CGST Act – ₹
30,000.

Ans. Eligible credit ₹ 1,95,000.

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Example 3: XYZ, a taxable person supplies goods and services during December 2018 as per following
particulars – a. Product A – taxable under GST – turnover within India – ₹ 20 lakhs b. Product A –
taxable under GST – exports without payment of GST – ₹ 5 lakhs c. Product B – exempt from GST –
turnover ₹ 10 lakhs d. Product C – subject to excise duty but not to GST – ₹ 25 lakhs e. Service D –
taxable under GST – ₹ 5 lakhs. His input tax details are as follows:

i. Total input credit in the taxable period – ₹ 4 lakhs.

ii. Tax on inputs and input services attributable exclusively for non-business purposes – ₹
50,000 (common input services were used for non-business purposes).
iii. Tax on inputs and input services intended to be used exclusively for effecting exempt
supply - ₹ 1 lakh.
iv. Tax on inputs and input services intended to be used exclusively for effecting taxable
supply – ₹ 1,20,000.
v. Input tax credit ineligible under section 17(5) of CGST Act – ₹ 30,000.

Ans. Eligible credit = 1,90,000.

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Rule 42(2) – After applying rule 42(1), the final calculations shall be done before September coming
after the concerned financial year is over. When final calculations are done, then take the decision as
follows:

Case 1: Aggregate of all months D1 and D2 as per rule 42(1) < D1+D2 in final calculation, then
the difference amount is added to the output tax liability of the registered person in the month not

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 later than the month of September following the end of the financial year to which such credit
relates.

Case 2: Aggregate of all months D1 and D2 as per rule 42(1) > D1+D2 in final calculation, then
the difference amount is claimed as credit by the registered person in his return for a month not
later than month of September following the end of the financial year to which such credit relates.

3.5 Option for A Banking Company

A banking company or a financial institution including a non-banking financial company,
engaged in supplying services by way of accepting deposits, extending loans or advances shall
have the option to either comply with the provisions of Section 17(2), or avail of, every month,
an amount equal to 50% of the eligible input tax credit on inputs, capital goods and input
services in that month and the rest shall lapse:
Provided that the option once exercised shall not be withdrawn during the remaining part of
the financial year.
Provided further that the restriction of 50% shall not apply to the tax paid on supplies made by
one registered person to another registered person having the same Permanent Account
Number.
3.6 Blocked Credit
Section 17(5) deals with the cases where the input tax credit is disallowed or blocked. The
provisions of this section are as follows:
Section 17(5)(a)
In case of motor vehicles (with approved seating capacity less than or equal to 13 including
driver) for transportation of persons, then the ITC is not available. However, there are three
exceptions to this i.e., if such motor vehicle is for
a) further supply or
b) transportation of passengers or
c) imparting training on driving such motor vehicle
Section 17(5) (aa)
In case of vessels and aircraft, the ITC is not available. However, in the following cases the
ITC is available if such vessel or aircraft is for
a) further supply of such vessel/aircraft or
b) transportation of passengers or
c) imparting training on navigating such vessels or imparting training on flying such
aircraft.
d) transportation of goods.
Clarification: ITC is also available on dumpers, works-trucks, fork-lift trucks etc.
Section 17(5) (ab)

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Services of general insurance, servicing, repair and maintenance which is related to motor
vehicles, vessels or aircraft mentioned in above two clauses (a) and (aa) are blocked for ITC.
However, in the following cases the ITC is available:
▪ if the motor vehicles, vessels and aircraft are used for the purposes mentioned in
above two clauses.
▪ if the service is received by a taxable person engaged
- in the manufacture of such motor vehicles, vessels and aircraft or
- in the supply of general insurance services in respect of such motor vehicles and
aircraft insured by him.
Section 17(5)(b)
ITC is not available on the following supply of goods or services or both:
1. food and beverages or
2. outdoor catering services or
3. health services or
4. beauty treatment or
5. cosmetic and plastic surgery or
6. leasing/renting/hiring of motor vehicles/vessels/aircraft as mentioned in clauses a and
aa above except when used for the purposes in the same clauses or
7. life insurance and health insurance
Note: If such goods or services or both are used by a registered person as inward supply for
outward taxable supply of the same category of goods or services or both or as an element of a
taxable composite or mixed supply, then ITC is available.
8. Membership of a club, health and fitness centre, and
9. Travel benefits extended to employees on vacation like leave or home travel
concession.
Note: if such goods or service or both are supplied to the employees by an employer due to a
law for the time being in force, then ITC shall be available.
Others blocked items under section 17(5)
a) Works contract service for construction, repairs, renovation, addition, alternations, re-
construction of immovable property except when used for further supply of works
contract service.

b) goods or services or both received by a taxable person for construction of an immovable

property (other than plant or machinery) on his own account including when such goods
or services or both are used in the course or furtherance of business.

Note: construction includes re-construction, renovation, additions or alterations or

repairs, to
the extent of capitalisation to the said immovable property.
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 c) Tax paid under the composition scheme under section 10.
d) Goods and services received by non-resident taxable person except goods imported by
him.
e) Goods and services used for personal consumption (may be of employees, directors or
even others)
f) Goods lost, stolen, destroyed, written off or given as gift or free samples.
g) Tax paid under sections 74, 129, and130
3.7 Input Tax Credit on Capital Goods
Section 2(19) of the CGST Act defines capital goods as: Capital goods means goods, the value
of which is capitalised in the books of account of the person claiming the credit and which are
used or intended to be used in the course or furtherance of business.
In case of supply of capital goods on which input tax credit has been taken, the registered
person shall pay an amount equal to the input tax credit taken on the said capital goods or plant
and machinery reduced by the percentage notified or the tax on the transaction value of such
capital goods or plant and machinery whichever is higher. In other words, in case capital goods
are removed after availing the credit for tax paid on it, then the higher of the following amounts
is paid to the government by the registered person.
1. ITC – 5% per quarter or part thereof or
2. tax on transaction value
However, in case of bricks, moulds and dies, jigs and fixtures are supplied as scrap, then tax
on the transaction value may be paid.
Note: Capital goods shall include plant and machinery. Plant and machinery mean apparatus,
equipment, machinery fixed to earth by foundation or structural support that are used for
making outward supply of goods or services or both and includes such foundation and
structural supports but excludes land and building or any other civil structure
telecommunication towers Pipelines laid outside the factory premises.
Example 4 – On 25th August, 2017, M/s Sharma, a registered supplier of textile products
located in Uttar Pradesh purchased on machine for ₹ 12,39,000 including IGST, from one
supplier of Maharashtra who issued invoice on the same date. The machine was put to use on
the same date and the credit was also availed. This machine was sold for ₹ 7,50,000 excluding
GST to Mr. Ravi of Andhra Pradesh on 20th August 2018. IGST rate is 18%. Is M/s Sharma
required to pay GST? If yes, calculate the amount of tax payable at the time of removal of the
machine.
Solution (in class)
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Example 5 – Bharat Associates Pvt. Ltd. purchased machinery worth ₹ 9,00,000 excluding
GST on 20-07-2019 on which it paid GST at 18%. It availed the ITC. On 05-03-2020 it sold
the machinery for ₹ 7,00,000 excluding GST to Hindustan Associates Pvt. Ltd. The GST rate
on sale is 18%. What will be the course of action for Bharat Associates Pvt. Ltd.
Solution (in class)
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Example 6 – XYZ Ltd. purchased a machine on 1-7-2017 for ₹ 10,00,000 on which GST was
paid at 18%. It availed the ITC and utilised the capital goods. On 2-10-2018 it sold the
machinery as second-hand goods for ₹ 7.50.000. State what steps it is required to take to
comply with statutory provisions.
Solution (in class)
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3.8 Special Cases

Case 1: First Time Compulsory Registration– Section 18(1)(a)
As per section 18(1) (a) a person who has applied for registration under the Act within 30 days
from the date on which he becomes liable to registration has been grated such registration shall
be entitled to take credit of input tax in respect of inputs held in
1. stock,
2. semi-finished goods,
3. finished goods
on the day immediately preceding the date from which he becomes liable to pay tax under the
CGST Act.
Note: ITC on capital goods is not allowed.
Case 2: First Time Voluntary Registration – Section 18(1)(b)

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As per section 18(1) (b) a person who has voluntarily applied for registration under the Act,
then he shall be entitled to take credit of input tax in respect of inputs held in
1. stock,
2. semi-finished goods,
3. finished goods
on the day immediately preceding the date of registration is granted.
Note: ITC on capital goods is not allowed.
Example:
X Ltd. is not required to register under CGST Act, 2017 but it wishes to obtain voluntary
registration, so it applied for voluntary registration on 17th September. 2017 and the registration
was granted to it on 25th September, 2017. The CGST and SGST liability for the month of
September, 2017 is ₹ 24,000 each. X Ltd. provides the following information of inputs and
capital goods held in stock on 24th September, 2017. It is not engaged in making inter-state
outward taxable supplies-
1. input procured on 02-09-2017 lying in stock – CGST ₹ 4500 and SGST ₹ 4500.
2. input received on 21-02-2017 contained in semi-finished goods held in stock- CGST at
6% - ₹ 7500 and SGST at 6% - ₹ 7500.
3. value of inputs contained in finished goods held in stock – ₹ 2,00,000 were procured
on 19-09-2016-IGST at 18%.
4. Inputs valued at ₹ 50,000 procured on 13-09-2017 lying stock – IGST at 18%.
5. Capital goods procured on 12-09-2017 – CGST at 6% ₹ 12000 and SGST at 6% ₹
12,000
You are required to compute the amount of tax to be paid in cash by X Ltd. for the month of
September, 2017.
Solution (in class)
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Case 3: Opting Out of Composition Scheme – section 18(1) (c)
When any registered taxable person ceases to pay tax under section 10 of the CGST Act, the
person shall be entitled to take credit of input tax credit in respect of inputs held in
1. stock
2. semi-finished goods
3. finished goods
4. capital goods

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on the day immediately preceding the date from which the person becomes liable to pay tax
under section 9 of the CGST Act. Further, tax credit on capital goods shall be reduced by 5%
per quarter or part thereof.
Case 4: ITC on Stock When Exemption on Goods or Services Withdrawn – Section
18(1)(d)
Where an exempt supply of goods or services or both by a registered taxable person becomes
a taxable supply, such person shall be entitled to take credit of input tax credit in respect of
inputs held in
1. stock
2. semi-finished goods
3. finished goods related to such exempt supply and
4. capital goods exclusively used for such exempt supply
on the day immediately preceding the day on which the person becomes liable to pay tax.
Further, tax credit on capital goods shall be reduced by 5% per quarter or part thereof.
Case 4: Reversal of ITC if goods become exempt or taxable person shifts to composition
scheme
If a taxable person shifts from normal scheme to composition scheme or his product which was
earlier taxable becomes exempt, he is required to reverse ITC of GST paid on stock, work in
progress and finished goods. He is also required to reverse ITC taken on capital goods after
allowing deduction of 5% per quarter. This reversal will be done by way of debit in the
electronic credit ledger or electronic cash ledger.
After payment of such payment, the balance of ITC, if any, in electronic credit ledger shall
lapse.
Case 5: Reversal of ITC if registration is cancelled
If GST registration of a taxable person is cancelled, reversal of ITC on inputs in stock is
required. Reversal of ITC on capital goods is also required by reducing the credit at 5% per
quarter or part thereof.
Case 6: Reversal of ITC if goods or services become wholly exempt or GST registration
cancelled
The input tax credit relating to inputs lying in stock, inputs contained in semi-finished and
finished goods lying in stock and capital goods lying stock shall be determined as follows:
For inputs lying in stock and inputs contained in semi-finished goods and finished goods lying
in stock the input tax credit shall be calculated proportionately on the basis of corresponding
invoices on which credit had been availed by the registered taxable person on such input.
For capital goods lying in stock the input tax credit involved in the remaining residual life in
month shall be computed on pro-rata basis, taking the total life as 60 months.
Illustration: Capital goods have been in use for 4 years 6 months and 15 days, then residual
life in months = 5 months ignoring a part of the month. Suppose the tax credit on such capital
goods is ₹ K, then ITC attributable to remaining residual life = K x 5/60

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Case 7: Recovery of ITC wrongly taken
Where credit has been taken wrongly, the same shall be demanded from the registered person
by issuing show cause notice under sections 73 and 74 of CGST Act.

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 Questions
Note: To solve the questions, use the current laws taught in the class
irrespective of the dates occurring in the questions.
1. Prisha Ltd supplied goods at ₹ 11500. She received goods valued at ₹ 10,000. The
supplier has charged GST in his invoice. State tax and central tax rate on supply of
goods is 9% each. Calculate the tax payable by her.
Answer: GST payable: CGST and SGST ₹ 135 each.
2. J supplied goods at ₹ 7500. J received goods valued at ₹ 10,000. The supplier has
charged GST in his invoice. They sold 60% of inputs procured and balance 40% were
in stock. SGST and CGST rate on supply and purchase of goods is 9% each. Calculate
the tax payable.
Answer: Credit carried forward: ₹ 225 each
3. D is a manufacture of drugs. SGST and CGST rate is 2.5% each. The sold the good at
₹ 10,000. They purchased inputs at ₹ 6500. SGST and CGST rat on inputs is 6% each.
All the inputs were used in manufacture of final products. There was no opening or
closing stock of inputs or final products. Calculate the tax payable.
Answer: Credit carried forward: ₹ 140 each
4. M is manufacturer of machinery. SGST and CGST rate on supply of goods is 9% each.
They sold the goods within in India at ₹ 3500. They exported goods for ₹ 6500. They
purchased inputs at ₹ 7000. SGST and CGST rate on inputs is 9% each. All these inputs
were used in manufacture of final products. There was no opening or closing stock of
inputs or final products. Calculate the tax payable.
Answer: Credit carried forward: ₹ 306 each.
5. A manufacturer procures input goods and services within state- ₹ 1000, SGST and
CGST rate on receipts is 9% each. He manufactured two products out of inputs. One
product of value of ₹ 800 was subject to SGST and CGST at 9% each. Other product
of value of ₹ 800 was exempt from SGST and CGST. Calculate the tax payable.
Answer: ₹ 27 each
6. Value of supply of goods of a trader in inter-state is ₹ 1200. IGST rate on supply of
goods is 18%. Value of receipt of goods and services within state is ₹ 1000. SGST and
CGST rate on receipts is 9% each. Calculate the tax payable.
Answer: Tax payable: ₹ 36
7. Value of supply of goods and services of a manufacturer in inter-state is ₹ 100. Value
of supply of goods and services of the manufacturer within state is ₹ 1100. IGST rate
on supply of goods and services is 18%. Value of receipts of inputs within state is ₹
1000. SGST and CGST rate on receipt is 9% each.
Answer: SGST: ₹ 9, CGST: ₹ 9 and IGST: ₹ 18
8. Ramesh of Delhi supplied some goods to Dinesh of Delhi for ₹ 25,000 exclusive GST.
Dinesh sold those goods to Z of Haryana for ₹ 35,000 exclusive of GST applicable. Z
sold the same goods to Raghu of Gurugram by doing value addition of 30%. CGST and
SGST rate is 9% each while IGST rate is 18%. You are required to calculate the SGST,
CGST and IGST payable by each supplier. Further calculate the revenue collected by
the Central government, Delhi government, Haryana Government.
9. Icy Ltd. forgot to claim the tax credit for an invoice dated 12/10/2018 (invoice number
252: amount: ₹ 5,25,000 including GST of ₹ 25,000). You are required to suggest the

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 tax manager of Icy Ltd. whether the claim can be done or not. If yes, then what is the
time limit.
10. A supplied goods worth ₹ 10,00,000 to B by charging GST of 18%. A raised an invoice
on 11/11/2017. B paid the due amount on 17/07/2018. Comment on the consequences
of the same.
11. Y (a GST registered supplier) is engaged in the manufacture of taxable goods. The
company provides the following information pertaining to GST paid on the purchases
made/input services availed of it during the month of July 2018 –
Raw material (to be received in September 2018) – ₹ 2.5 lakhs.
Membership of a club availed for employees working in the factory – ₹ 145000
Inputs to be received in 5 lots out of which 3rd lot is received during the month – ₹
80,000.
Trucks used for transport of raw material – ₹ 40,000.
Capital goods (out of 3 items, invoice for 2 items is missing and GST paid on that item
is ₹ 80,000) – ₹ 1,50,000.
Determine the amount of ITC available for the month of July 2018.
Answer: ₹ 1,10,000
12. From the following information compute the net GST payable for the month of March
2021.
Tax GST on outward supply ITC balance in credit
ledger as on March 1,
2021
CGSST 2000 NIL
SGST 15000 1000
IGST 24000 37000

13. Y ltd a registered supplier, is engaged in the manufacture of tanks. The company
provides the following information pertaining to GST paid on the purchases made/input
services availed by it during the month of January 2019 –
Purchase of machinery (a debit note was issued) – ₹ 1,15,000
Input purchased was directly delivered to Z a job worker and a registered supplier – ₹
80,000.
Computers purchased (depreciation was claimed on the said GST portion under the
income tax act) – ₹ 50,000.
Works contract services availed for construction of staff quarters within the company
premises – ₹ 4,25,000.
Determine the amount of ITC for the month of January 2019.
Answer: ₹ 1,95,000

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