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CA Final · Indirect Tax Laws · Input Tax Credit

Kaveri Industries' ISD in Karnataka has common input service credit of CGST Rs 6,000 and SGST Rs 6,000 attributable to all recipients. The recipients, all having the same PAN, and their turnovers in the preceding financial year (each has turnover in that year) are: A (Karnataka) Rs 40 lakh, B (Tamil Nadu) Rs 35 lakh, and C (Karnataka) Rs 25 lakh. What credit is distributed to B?

B receives IGST of Rs 4,200. Its turnover share is 35 percent of the total distributable credit of Rs 12,000, and since B is outside Karnataka, the CGST and SGST portions are distributed together as integrated tax.

  1. AIGST of Rs 2,100
  2. BCGST Rs 2,100 and SGST Rs 2,100
  3. CIGST of Rs 4,200Correct
  4. DIGST of Rs 4,000

Explanation

Share of B = 35/100 x Rs 12,000 (CGST + SGST) = Rs 4,200. B is in a State other than the ISD's, so the amount is distributed as integrated tax equal to the aggregate of CGST and SGST credit qualifying for B. Taking only Rs 6,000 x 35% = Rs 2,100 ignores the SGST component.

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