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CA Final · Indirect Tax Laws · Input Tax Credit

Kaveri Textiles ISD, located in Gujarat, has Rs 90,000 of IGST credit on an input service attributable to three recipients with the same PAN: Unit A (Gujarat), Unit B (Gujarat) and Unit C (Kerala). Turnovers in the relevant period are A Rs 2 crore, B Rs 3 crore and C Rs 4 crore. All three are operational in the current year. What amount of integrated tax credit goes to Unit C?

Unit C receives Rs 40,000 as integrated tax credit. Its share is its turnover of Rs 4 crore divided by the total Rs 9 crore of all recipients, multiplied by Rs 90,000, and integrated tax credit is always distributed as integrated tax to every recipient.

  1. ARs 40,000 as integrated taxCorrect
  2. BRs 30,000 as integrated tax
  3. CRs 40,000 as CGST and SGST in equal halves
  4. DRs 90,000 as integrated tax

Explanation

Under the formula C1 = (t1/T) x C, Unit C gets 4/(2+3+4) x 90,000 = 40,000. Integrated tax credit is distributed as integrated tax credit to every recipient (clause i). Option Rs 30,000 wrongly uses Unit B's share or an equal split.

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