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CMA Final · Indirect Tax Laws and Practice · Input Tax Credit

Which statement about the ISD distribution rules in the CGST Rules, 2017 is correct?

The ISD must distribute ineligible credit and eligible credit separately. The other statements fail because credit must be distributed in the same month it is available, the amount distributed cannot exceed the credit available, and IGST credit is distributed as IGST to every recipient.

  1. ACredit available for distribution in a month may be distributed in any later month of the financial year
  2. BThe ISD may distribute more than the credit available, if the excess is recovered later
  3. CThe ISD must separately distribute ineligible credit and eligible creditCorrect
  4. DIGST credit is distributed to recipients as CGST and SGST

Explanation

The rules require ineligible credit (for instance under the blocked credit provisions) and eligible credit to be distributed separately. Credit available in a month must be distributed in the same month, and the amount distributed cannot exceed the credit available. IGST credit is distributed as IGST to every recipient.

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