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CA Final · Indirect Tax Laws · Input Tax Credit

Kaveri Services Ltd (ISD) has three recipient units, A, B and C. Each is a separate registered person with the same PAN as the ISD. Unit C has had no turnover in its State in the preceding financial year because it began operating recently, though turnover details for all three units are available for the last quarter before the distribution month. Which period is the 'relevant period' for distributing credit?

The relevant period is the last quarter for which turnover details of all recipients are available before the month of distribution. Because one unit had no turnover in the preceding financial year, the financial-year basis does not apply and the quarter basis is used instead.

  1. AThe preceding financial year of the units that had turnover, ignoring C
  2. BThe last quarter for which turnover details of all the recipients are available, before the month of distributionCorrect
  3. CThe current financial year up to the month of distribution
  4. DThe preceding calendar month only

Explanation

Under the Explanation, if some or all recipients do not have turnover in the preceding financial year, the relevant period is the last quarter for which turnover details of all recipients are available, previous to the month of distribution. The preceding financial year applies only if all recipients have turnover in it.

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