Entitlement of ITC or Input tax credit in stock at the time of GST registration

In our last article we have discussed how to take GST registration in India, when you should register yourself under goods and services tax law and what are the documents you require to avail input tax credit. In this article, we will be discussing your entitlement of input tax credit in stock when you register under GST law.

A person who has applied for GST registration within 30 days from the date on which he becomes liable to registration and has been granted such registration shall be entitled to take credit of input tax in respect of;

  • inputs held in stock; and
  • inputs contained in semi-finished or finished goods held in stock;

on the day immediately preceding the date from which he becomes liable to pay tax.

In case of voluntary registration U/s 25(3), the registered person shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration.

In both the cases, a registered taxable person is eligible to get input tax credit in stock with the only difference being the date on which the stock should be taken into account.

However, a registered person shall not be entitled to take input tax credit in respect of supply of goods and/or services after the expiry of 1 year from the date of issue of tax invoice relating to such supply.

Declaration showing eligibility to avail input tax credit or ITC

As per rule 40, the registered person shall within a period of 30 days from the date of becoming eligible to avail input tax credit u/s 18(1), or within such further period as may be extended by the commissioner by a notification in this behalf, shall make a declaration electronically, on the common portal in Form GST ITC-01 to the effect that he is eligible to avail the input tax credit as aforesaid.

The registered person has to make an electronic declaration in form GST ITC-01 on the common portal and shall clearly specify the details relating to the inputs held in stock or inputs contained in semi-finished or finished goods held in stock, or as the case may be, capital goods on the day immediately preceding the date from which he becomes liable to pay tax.

In case of voluntary registration, it should be filed on the day immediately preceding the date of registration.

Declaration in GST ITC-01 has to be filed within 30 days from the date when the registered person becomes eligible to avail ITC.

Details in the return furnished on the common portal in Form GST ITC-01 shall be duly certified by a practicing chartered accountant or a cost accountant if the aggregate value of the claim on account of CGST, SGST, UTGST and IGST exceeds 2,00,000 rupees.

The amount of credit in the case of supply of capital goods or plant and machinery for the purpose of 18(6), shall be calculated by reducing the input tax on the said goods at the rate of 5% point for every quarter or part thereof from the date of the issue of the invoice for such goods.

is a fellow member of the Institute of Chartered Accountants of India. He lives in Bhubaneswar, India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.