Welcome to your Ch 21: Input Tax Credit (46 to 50)
46. With reference to the provisions of section 17 of the CGST Act, 2017, examine the availability of input tax credit under the CGST Act, 2017 in the following independent cases:-
(i) MBF Ltd., an automobile company, has availed works contract service for construction of a foundation on which a machinery (to be used in the production process) is to be mounted permanently.
(ii) Shah & Constructions procured cement, paint, iron rods and services of architects and interior designers for construction of a commercial complex for one of its clients.
(iii) ABC Ltd. availed maintenance & repair services from “Jaggi Motors” for a truck used for transporting its finished goods.
47. Krishna Motors is a car dealer selling cars of an international car company. It also provides maintenance and repair services of the cars sold by it as also of other cars. It seeks your advice on availability of input tax credit in respect of the following expenses incurred by it during the course of its business operations:
(i) Cars purchased from the manufacturer for making further supply of such cars. Two of such cars are destroyed in accidents while being used for test drive by potential customers.
(ii) Works contract services availed for constructing a car shed in its premises.
48. Match the following as per rule 42.
49. Compute eligible credit under rule 42. Input and input service is used for both exempt and taxable supplies.
50. Compute ineligible common credit under rule 43 for the month of June. Capital goods is used for both exempt and taxable supplies.
1 Asset purchased on 1-6 which is capitalized in the books of account. IGST is 5.
2 Aggregate turnover of exempt supplies 2,00,000.
3 Aggregate turnover of taxable supplies 3,00,000.
