Skip to content

CA Intermediate · Taxation · Input Tax Credit

Ananya Textiles, a registered regular taxpayer in Surat, purchased a laptop for Rs 80,000 plus GST of Rs 14,400 (18%) and uses it exclusively for its taxable outward supplies. Which statement about its input tax credit is correct?

Full ITC of Rs 14,400 is available, because the laptop is capital goods used exclusively for taxable outward supplies in the course of business. GST has no staggered credit for capital goods, only the usual conditions such as invoice, receipt of goods and tax payment.

  1. AFull credit of Rs 14,400 is available, subject to the general conditions for ITCCorrect
  2. BNo credit is available because the laptop is capital goods
  3. CCredit of 50% only is available in the first year
  4. DCredit is available only if the laptop is also capitalised under the Income-tax Act

Explanation

Capital goods used in the course or furtherance of business for taxable supplies qualify for ITC in full, subject to conditions such as invoice, receipt, tax paid and return filing. There is no 50% restriction under GST for capital goods. Option B wrongly treats capital goods as blocked.

Did you get it right without looking?

One question tells you little. A timed set on Input Tax Credit shows your real accuracy, how long you take and where you lose marks.

Practise Input Tax CreditFree diagnostic mock

More Input Tax Credit questions