Complete Guide : Will I Get The GST Input Credit Or Not?
GST has been welcomed with all the pomp and show, and deservingly so. It has inherent advantages. We all know that amount paid as GST on purchases or even expenses can be claimed as GST input credit. This was not possible in the earlier regime of VAT and Service Tax.
Example: If you were dealing in sale of goods where VAT was chargeable and had paid service tax for availing service of Chartered Accountant, you could not avail the credit of service tax paid to your CA against payment of VAT. This is now possible under GST since there is no difference in tax on goods or services. Now, if your VAT payable on goods sold is Rs 30,000, and if you availed services of a CA and paid GST of say, Rs 18,000, then you will get a GST input credit of Rs 18,000 against payment of Rs 30,000 GST payable. Hence, you net GST payable will be Rs 12,000 only.
Woaahh, what a relief to an entrepreneur. But, but, but, there is little sad news, just little.
There are certain expenses, on which credit will not be allowed.
In following cases you won’t be allowed to claim GST Input Credit
Motor vehicles and conveyance charges
Except: When you are engaged in the business of transport, which can be transportation of passengers or goods or motor driving training
Rent-a-cab service, Health Insurance, and Life Insurance
Except: Provided as a part of business or composite supply
Travel benefits to employees
Food & Beverages, Outdoor Catering, Beauty Treatment, Health Services, Cosmetic & Plastic Surgery
Except: When you are engaged in the business of above goods/services
Example: Buying and selling cosmetics in the process of rendering beauty services will provide you the credit on purchase of cosmetics
Membership of Club or Fitness Centre or Health Centre
Goods/services used for construction of immovable property, whether for business or for personal use
Works contract services, when supplied for the construction of immovable property
Except: One works contract service is input for another works contract service or Work Contracts Service supplied for construction of plant and machinery.
Goods/services used for personal consumption
GST has been paid under the composition scheme
Goods/services received by Non Resident Taxable Person
Except: Non Resident is a taxable person under GST
Goods lost/stolen/destroyed/gifted/written off/distributed as free sample
Tax paid due to non payment of tax/short payment of tax / excessive refunds
ITC utilized or availed by way of fraud/willful misstatement/suppression of facts
GST paid on expenses or purchases other than above are fully allowed.