CMA Intermediate · Direct and Indirect Taxation · Input Tax Credit
Mehta Traders, a registered person, bought a laptop with GST of Rs 18,000. It is used 80% for the business and 20% by the proprietor for personal purposes. Under section 17(1), what credit is permitted?
Rs 14,400 is allowed. When goods are used partly for business and partly for other purposes, section 17(1) limits credit to the input tax attributable to business. Eighty percent of Rs 18,000 is Rs 14,400, while the Rs 3,600 personal share is disallowed.
- ARs 18,000
- BRs 3,600
- CRs 14,400Correct
- DNil
Explanation
Section 17(1) restricts credit to the input tax attributable to business use. Business share is 80%, so credit is 18,000 x 80% = Rs 14,400. Rs 3,600 is the personal portion, which is not allowed.
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