Section 18 CGST Act 2017

[ Section 18 CGST Act 2017 Notified w.e.f 01.07.2017 vide Notification No. 9/2017 – Central Tax Dated 28th June, 2017 ]

Section 18 CGST Act 2017 relates to Availability of credit in special circumstances is covered in Chapter V Input Tax Credit

[Note : CGST Act 2017 also known as CENTRAL GOODS AND SERVICES TAX ACT, 2017 assented by the President of India on 12-4-2017 -An Act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and the matters connected therewith or incidental thereto. ]

Availability of credit in special circumstances.

18. (1) Subject to such conditions and restrictions as may be prescribed [ Note 4 and 5 ] —

(a) a person who has applied for registration under this Act within thirty days from the date on which he becomes liable to registration and has been granted such registration shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately
preceding the date from which he becomes liable to pay tax under the provisions of this Act;

(b) a person who takes registration under sub-section (3) of section 25 shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration;

(c) where any registered person ceases to pay tax under section 10, he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax under section 9:

Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed; [ Note -1 ]

(d) where an exempt supply of goods or services or both by a registered person becomes a taxable supply, such person shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the day immediately preceding the date from which such supply becomes taxable:

Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed. [ Note -1 ]

(2) A registered person shall not be entitled to take input tax credit under subsection (1) in respect of any supply of goods or services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply.

(3) Where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed.

(4) Where any registered person who has availed of input tax credit opts to pay tax under section 10 or, where the goods or services or both supplied by him become wholly exempt, he shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods, reduced by such percentage points as may be prescribed ( Note – 2 ), on the day immediately preceding the date of exercising of such option or, as the case may be, the date of such exemption:

Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger shall lapse.

(5) The amount of credit under sub-section (1) and the amount payable under sub-section (4) shall be calculated in such manner as may be prescribed

(6) In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher: [Note-6]

Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of such goods determined under section 15. [ Note -3 ]

Note –

6. refer Q 21 of GST FAQs on Financial Services Sector published by CBIC

5. Seeks to extend the time limit for filing FORM GST ITC-01 vide Notification No 67/2017 Central Tax dated 21st December, 2017

1  Refer Rule 40 CGST Rules 2017 explains Manner of claiming credit in special circumstances and is covered in Chapter V : Input Tax Credit  : Inserted by the Central Goods and Services Tax (Second Amendment) Rules, 2017, w.e.f. 1-7-2017.)

2. Refer Rule 44 CGST Rules 2017 explains Manner of reversal of credit under special circumstances and is covered in Chapter V : Input Tax Credit  : Inserted by the Central Goods and Services Tax (Second Amendment) Rules, 2017, w.e.f. 1-7-2017.

Refer Rule 43 CGST Rules 2017 explains Manner of determination of input tax credit in respect of capital goods and reversal thereof in certain cases and is covered in Chapter V : Input Tax Credit  : Inserted by the Central Goods and Services Tax (Second Amendment) Rules, 2017, w.e.f. 1-7-2017.

3 Refer Rule 44(6) CGST Rules 2017 explains Manner of reversal of credit under special circumstances and is covered in Chapter V : Input Tax Credit  : Inserted by the Central Goods and Services Tax (Second Amendment) Rules, 2017, w.e.f. 1-7-2017.

4 Seeks to extend the time limit for submission of FORM GST ITC-01 by the registered persons who have become eligible during the months of July, 2017, August, 2017 and September, 2017, vide Notification No 44/2017 Central Tax dated 13th October, 2017

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