{"id":22114,"date":"2020-12-16T15:02:06","date_gmt":"2020-12-16T09:32:06","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=22114"},"modified":"2024-07-03T10:53:18","modified_gmt":"2024-07-03T05:23:18","slug":"unregistered-person-can-claim-itc-of-vat-by-registering-under-the-regime-of-gst","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/unregistered-person-can-claim-itc-of-vat-by-registering-under-the-regime-of-gst\/","title":{"rendered":"Unregistered Person Can Claim ITC of VAT by Registering Under the Regime of GST"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Input tax credit (ITC) is a vital\nterm of understanding that has various ramifications under the regime of GST.\nOne of the main objectives for establishing GST is to bypass the overflow\neffect of the various taxes and assure seamless progress of credits.&nbsp; <\/p>\n\n\n\n<p>The GST law includes the various\nprovisions which diminish the consistency of input tax credit of goods\/or\nservice. In a changing scenario, the government keeps on formulating several\namendments under the regime of GST. There are various sections defined under\nGST law related to ITC for all leagues of taxpayers.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/unregistered-person-can-claim-itc-of-vat-by-registering-under-the-regime-of-gst\/#Introduction_to_ITC\" >Introduction to ITC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/unregistered-person-can-claim-itc-of-vat-by-registering-under-the-regime-of-gst\/#Taxes_under_the_Regime_of_GST_to_Claim_ITC\" >Taxes under the Regime of GST to Claim ITC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/unregistered-person-can-claim-itc-of-vat-by-registering-under-the-regime-of-gst\/#Conditions_to_Claim_ITC_under_the_Regime_of_GST\" >Conditions to Claim ITC under the Regime of GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/unregistered-person-can-claim-itc-of-vat-by-registering-under-the-regime-of-gst\/#Norms_to_Claim_ITC_of_VAT_Registering_Under_the_Regime_of_GST\" >Norms to Claim ITC of VAT Registering\nUnder the Regime of GST<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/unregistered-person-can-claim-itc-of-vat-by-registering-under-the-regime-of-gst\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction_to_ITC\"><\/span>Introduction to ITC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Input tax credit (ITC) is the tax\nthat entrepreneurs pay at the time of purchase and that it can be used to\ncurtail its tax liability when it makes a sale. In other words, the enterprises\ncan curtail their tax liability by alleging credit to the extent of GST paid on\nthe purchase. <\/p>\n\n\n\n<p>GST is a unified tax system where\nevery enterprises purchase shall be matched with a sale or another by another\nbusiness. This makes the flow of credit across an entire supply chain a\nseamless process. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How Does ITC Works Under the Regime of GST? <\/h3>\n\n\n\n<p>When trader sales goods to the customer, he collects GST based on the HSN of the goods sold and places the destination. At the time of making payment for the above taxes, an input tax credit will be allowed in a below-listed manner-<\/p>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong>Credit<\/strong>\n  <\/td><td>\n  <strong>1st\n  to be utilized for payment of<\/strong>\n  <\/td><td>\n  <strong>Balance\n  if any<\/strong>\n  <\/td><\/tr><tr><td>\n  CGST\n  <\/td><td>\n  CGST\n  <\/td><td>\n  IGST\n  <\/td><\/tr><tr><td>\n  IGST\n  <\/td><td>\n  IGST\n  <\/td><td>\n  CGST\n  and then SGST\/UTGST\n  <\/td><\/tr><tr><td>\n  SGST\/UTGST\n  <\/td><td>\n  SGST\/UTGST\n  <\/td><td>\n  &nbsp;IGST\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p><strong><em>For Example<\/em><\/strong><\/p>\n\n\n\n<p>The price of the product in the\nhands of the dealer is the amount of Rs. 825. This involves the amount of Rs.\n125 as GST.&nbsp; The trader can claim amount\nof Rs. 125 as an input tax credit and diminish his original tax liability\namount of Rs. 180 by this amount. In simple words, the trader will need to pay\nonly amount of Rs. 55 (Rs. 180- Rs.125) to the government.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Taxes_under_the_Regime_of_GST_to_Claim_ITC\"><\/span>Taxes under the Regime of GST to Claim ITC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>There are four types of taxes discussed\nunder the regime of GST on which the ITC to be claimed. Those are as follows:-<\/p>\n\n\n\n<ul>\n<li>Integrated GST\n(IGST) is for interstate movement of goods <\/li>\n\n\n\n<li>Central GST\n(CGST) &amp; State GST (SGST) \/ Union territory GST (UTGST) is for intrastate\nmovement of goods. <\/li>\n\n\n\n<li>GST Compensation\ncess is for notified goods<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_to_Claim_ITC_under_the_Regime_of_GST\"><\/span>Conditions to Claim ITC under the Regime of GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Every registered individual can be\nauthorized to claim ITC charged on any supply of goods or services to him who\nis used or intended to be used in the course of his business.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Eligibility for Claiming ITC (Under Section 16 CGST ACT, 2017)<\/h3>\n\n\n\n<p> The registered person can claim ITC charged u\/s 16 of CGST ACT, 2017, if he falls under the below-mentioned eligibility criteria. <\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"1024\" height=\"440\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Eligible-for-Taking-ITC-1024x440.png\" alt=\"Eligibility for Claiming ITC\" class=\"wp-image-22116\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Eligible-for-Taking-ITC-1024x440.png 1024w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Eligible-for-Taking-ITC-300x129.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Eligible-for-Taking-ITC-768x330.png 768w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Eligible-for-Taking-ITC.png 1140w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n<ul>\n<li>An individual should have a <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>GST registration<\/strong><\/a>.<\/li>\n\n\n\n<li>An individual can claim Input Tax Credit only if the goods and services received is used for the course of business.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Conditions for\nTaking ITC <strong>(Under Section 16 CGST\nACT, 2017)<\/strong><strong><\/strong><\/h3>\n\n\n\n<p>The below-mentioned\nconditions to be met in order to claim the ITC u\/s 16 of CGST ACT, 2017<\/p>\n\n\n\n<ul>\n<li><strong><em>Possesion of Invoice<\/em><\/strong><\/li>\n\n\n\n<li><strong><em>Tax Levied on Supply actually paid to Govt<\/em><\/strong><\/li>\n\n\n\n<li><strong><em>Claim ITC by filing GSTR- 3B<\/em><\/strong><\/li>\n\n\n\n<li><strong><em>Receipt of the Goods\/Services<\/em><\/strong><\/li>\n<\/ul>\n\n\n\n<p>Individual must have a debit note, tax invoice, supplementary invoice, in order to entitle the Input Tax Credit. Moreover, the individual shall make payment in cash or using ITC on the goods and\/or services for which the ITC is taken. Also, all GST returns such as GST-1, 2,3, 6, and 7 must be filed as per requirement.<\/p>\n\n\n\n<ul>\n<li><strong>Payment\nfor the invoice to be cleared within 180 days from the date of the invoice<\/strong><strong><\/strong><\/li>\n<\/ul>\n\n\n\n<ol>\n<li>The registered person must have cleared the payment to the supplier within the 180 days from the date of invoice has been generated.<\/li>\n\n\n\n<li>If the registered individual fails, such credits availed by the recipient should be reversed in GSTR -3B. &nbsp;Interest will be charged @ 18% from the date of utilizing credit until the refund of credit.<\/li>\n\n\n\n<li>When the payment is made to the supplier after that, the registered individual shall be authorized to utilize the credit again without any stipulated time period.<\/li>\n<\/ol>\n\n\n\n<ul>\n<li><strong>Exception <\/strong><strong><\/strong><\/li>\n<\/ul>\n\n\n\n<p>The aforesaid condition of payment of the value of supply plus tax within 180 days will not be applicable in the following situations:<\/p>\n\n\n\n<ol>\n<li>Goods&nbsp; on which tax is chargeable under refund charge<\/li>\n\n\n\n<li>Deemed supplies without consideration.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Norms_to_Claim_ITC_of_VAT_Registering_Under_the_Regime_of_GST\"><\/span>Norms to Claim ITC of VAT Registering\nUnder the Regime of GST<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>This case will be considered the\ncase of excise duty; unregistered people can available VAT credit by\nregistering under the regime of GST.<\/li>\n\n\n\n<li>The credit of both and entry tax\nwill be available.<\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Reasons-for-the-Growth-of-Indian-Retail-Sector.png\" alt=\"Norms to Claim ITC\" class=\"wp-image-22128\" width=\"499\" height=\"499\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Reasons-for-the-Growth-of-Indian-Retail-Sector.png 1000w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Reasons-for-the-Growth-of-Indian-Retail-Sector-150x150.png 150w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Reasons-for-the-Growth-of-Indian-Retail-Sector-300x300.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Reasons-for-the-Growth-of-Indian-Retail-Sector-768x768.png 768w\" sizes=\"(max-width: 499px) 100vw, 499px\" \/><\/figure><\/div>\n\n\n<h3 class=\"wp-block-heading\">Condition When Evidences of Payment of&nbsp;VAT Is&nbsp;Not&nbsp;Available<\/h3>\n\n\n\n<p>A certified\nindividual (prior not certified under VAT), posses goods which were tax paid only\nat the first point in the state and subsequent sales of which were not tax\npaid, shall be granted to avail input tax credit on stock-in-hand on the enacted\nday of GST ACT,2017&nbsp; i.e., &nbsp;&nbsp;(1st&nbsp;July 2017).<\/p>\n\n\n\n<p>The credit shall be granted at the rate of 40% of the SGST applicable after the <strong>GST ACT<\/strong> enacted date 1<sup>st<\/sup> July 2017. ITC of 60% shall be applicable if the total GST Rate is 18% more than it.<\/p>\n\n\n\n<p>This credit shall\nbe&nbsp;credited to the taxpayer\u2019s\nelectronic ledgeronly after payment of output SGST&nbsp;on those\ngoods of sale. It will be applicable from the appointed date (i.e., till\n31st&nbsp;December 2017). The below-mentioned conditions will have to be fulfilled\nfor this:-<\/p>\n\n\n\n<ul>\n<li>Those\ngoods shall <strong>not be&nbsp;excluded <\/strong>from the current VAT.<\/li>\n\n\n\n<li>The\nregistered person shall have documents (shreds of evidence)&nbsp;of these goods\nlike challan\u2019s, receipt of invoice, etc. <\/li>\n\n\n\n<li>A\nregistered person using this scheme shall separately&nbsp;<strong>submit the details\nof stock<\/strong>&nbsp;in hand on 1st&nbsp;July.<\/li>\n\n\n\n<li>The\nregistered person shall provide&nbsp;<strong>particulars of sales<\/strong>&nbsp;of such\nproducts mentioned in the FORM<strong> GST TRAN-1<\/strong>&nbsp;on the last date\nof every month during which the scheme is active.<\/li>\n\n\n\n<li>The\ncredited granted cost will be transferred to the electronic credit ledger\nprovided in the&nbsp;<strong>FORM GST PMT-2<\/strong>.<\/li>\n\n\n\n<li>The<strong>&nbsp;stock of\nproducts<\/strong>&nbsp;on which the credit is utilized must be&nbsp;<strong>easily recognized\n<\/strong>by the certified individual maintained accordingly.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The GST journey started in 2000 when\na committee was formed to draft comprehensive law to deal with all indirect\ntaxes. When GST comes into enforcement in the year 2017 at that time, there\nwere many laws present in the society like excise duty, sales tax, service tax,\nvat. <\/p>\n\n\n\n<p>To rectify the previous law related to taxes, the Government had announced the GST Act,2017, but the implementation of new law over the previous laws is a difficult task so the government has implemented the GST with some exceptions and these certain exceptions allows an unregistered person to claim the ITC of VAT by registering under the regime of GST. This case will be considered as the case of excise duty under the regime of GST.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/gstn-rolled-out-solutions-to-prominent-gst-errors\/\">\nGSTN Rolled out Solutions to Prominent GST Errors\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Input tax credit (ITC) is a vital term of understanding that has various ramifications under the regime of GST. One of the main objectives for establishing GST is to bypass the overflow effect of the various taxes and assure seamless progress of credits.&nbsp; The GST law includes the various provisions which diminish the consistency of [&hellip;]<\/p>\n","protected":false},"author":32,"featured_media":22140,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[1328],"acf":{"service_id":"96"},"authorName":"Komal Singh","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/processed.jpeg","authorDescription":"Komal Singh is a Legal scholar, having diverse experience in scripting research papers, articles &amp; dissertations, which serves her main interest &amp; competent in drafting legal documents. She has polished her skills in dealing with the matter related to consumer affairs and now building intelligible Legal Content for Corpbiz.","postViews":5486,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/22114"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/32"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=22114"}],"version-history":[{"count":20,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/22114\/revisions"}],"predecessor-version":[{"id":65161,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/22114\/revisions\/65161"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/22140"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=22114"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=22114"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=22114"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}