Allow ITC credit on Capital goods in transit as on appointed date : ICAI suggestion

Suggestions on GST Acts (July 2017) by Institute of Chartered Accountants of India

50. Capital goods in transit as on the appointed date

Section 140(5) of the CGST Act, 2017 provides that a registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day.

Issue

The aforesaid provision does not allow credit of duties and taxes in respect of capital goods received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law. Excise and VAT paid on the capital goods will form a part of cost for the assesse. This might be unfair to disallow the credit of such taxes paid.

Suggestion:

It is suggested that the law be amended to allow credit of duty paid on capital goods which remain in transit during the appointed day.

Read ICAI Suggestions on GST Act to Govt : July 2017

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