CMA Final · Indirect Tax Laws and Practice · Input Tax Credit
An ISD has Rs 60,000 of eligible credit on an input service attributable to all recipients. Relevant-period turnovers of the recipients with the same PAN, all operational in the current year, are: Unit A Rs 2 crore, Unit B Rs 3 crore, Unit C Rs 5 crore. What credit goes to Unit B?
Unit B gets Rs 18,000. Using the formula C1 = (t1/T) x C, Unit B's turnover of 3 crore over the aggregate 10 crore gives 30 percent of Rs 60,000. An equal split of Rs 20,000 ignores the turnover basis.
- ARs 20,000
- BRs 18,000Correct
- CRs 30,000
- DRs 12,000
Explanation
C1 = (t1/T) x C. T = 2+3+5 = 10 crore. For Unit B, 3/10 x 60,000 = Rs 18,000. Rs 20,000 wrongly divides equally among three units.
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