CMA Intermediate · Direct and Indirect Taxation · Input Tax Credit
An ISD has Rs 1,20,000 of eligible credit on a common input service attributable to all three recipients having the same PAN. Relevant-period turnovers are: R1 Rs 50 lakh, R2 Rs 30 lakh, R3 Rs 20 lakh, all operational in the current year. What credit goes to R2?
R2 receives Rs 36,000. Under the Rule 39(1)(f) formula, the credit is C x t1/T, which is 1,20,000 x 30/100, with turnover of all recipients totalling Rs 100 lakh. Equal sharing is not the prescribed method.
- ARs 36,000Correct
- BRs 40,000
- CRs 30,000
- DRs 60,000
Explanation
Under Rule 39(1)(e) and (f), C1 = (t1/T) x C. T = 50 + 30 + 20 = Rs 100 lakh. R2 = (30/100) x 1,20,000 = Rs 36,000. Rs 40,000 would come from equal distribution, which the rule does not provide.
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