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CS Executive · Tax Laws and Practice · Input Tax Credit and Computation of GST Liability

Kaveri Finance Ltd, an NBFC supplying loans, opts in April for the 50% route under section 17(4). In that month its eligible input tax credit on inputs, capital goods and input services is ₹4,00,000, of which ₹60,000 is tax paid on supplies from its own branch in another state having the same PAN. Assuming the 50% restriction does not apply to the same-PAN supplies, what credit may be availed for the month, and can the option be withdrawn within the year?

The company may avail ₹2,30,000. Tax of ₹60,000 on same-PAN supplies is fully allowed, and 50% of the remaining ₹3,40,000 gives ₹1,70,000. The option, once exercised, cannot be withdrawn during the rest of the financial year.

  1. A₹2,00,000; option can be withdrawn next month
  2. B₹2,00,000; option cannot be withdrawn in the remaining financial year
  3. C₹2,30,000; option cannot be withdrawn in the remaining financial yearCorrect
  4. D₹2,30,000; option can be withdrawn next month

Explanation

Tax on the same-PAN supplies, ₹60,000, is fully available. The remaining ₹3,40,000 is restricted to 50%, giving ₹1,70,000. Total is ₹1,70,000 + ₹60,000 = ₹2,30,000. The option once exercised cannot be withdrawn during the remaining part of the financial year.

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