| Question And Answer | |
|---|---|
| Subject: | Input tax credit. |
| Category: | GST |
| Querist: | Mohammad Ali, Tax Practitioner |
| Answered by: | CA Sujay Ajgaonkar. |
| Tags: | GST, input tax credit |
| Date: | June 26, 2021 |
Respected expert team.
Commercial tax officer visited my business premises and inspected Book of accounts and etc. And they obtain written statement from me. My query is Commercial tax officer disallowed the ITC availed on purchase of car and hardware tools and I’m not charging depreciation on car and hardware tools. Kindly suggest me to deal with this me matter.
Thank you
Mohammad Ali
Tax practitioner
In response to your query,
1) Input tax credit on cars prima facie is blocked as per section 17(5) of the CGST Act. There are several exceptions to this which could be looked up under 17(5) (a) of the Act. Also, given that this credit is blocked under the Act, capitalising the GST component and claiming depreciation on the same would be a possibility.
2) Input Tax credit is allowed on Hardware Tools ( if treated as Capital Goods) in case there is no depreciation claimed on the GST component whenever the same are capitalised. In case these hardware tools are treated as inputs the ITC on the same should be allowable if they are not explicitly blocked under section 17(5) of the CGST Act.
In either case, care should be taken that the above items are used in the course or furtherance of business. If they are used for personal consumption, they would be blocked under Section 17(5) (g) of the CGST Act.
I would recommend going through Section 17(5) of the CGST Act and checking applicability in your case before responding to the commercial tax (GST) officer.
Best Regards,
Sujay Ajgaonkar.