25. Input tax credit on stock held on the appointed day.
(1) Subject to the provisions of sub-section (3) of section 14, the input tax credit on goods, other than the capital goods, held in stock by a taxable person, registered under the repealed Act on the appointed day, shall be available subject to the following conditions ,namely : -
(a) the person claiming the input tax credit is registered under the Act as a taxable person;
(b) such person has submitted statement of such goods within a period of thirty days from the appointed day, in such form, as may be notified.
(c) the taxable person ,shall retain documents relating to the claim of the input tax credit for a period of six years from the appointed day and shall provide such documents to the Commissioner or the designated officer for audit as and when required.
- (2) Only those goods on which tax was paid under sub-sections (1-A) and (3) of section 5 of the repealed Act, prior to the appointed day and are taxable under the Act, shall be eligible for input tax credit.
- (3) The input tax credit, shall be calculated as follows: -
(a) in respect of the goods which were subjected to tax at the first stage under the repealed Act, and the tax has been charged separately on the bill, the input tax credit shall be the amount of such tax or the tax which should have been payable at the rate, applicable on the day, preceding the appointed day or the rate of tax under the Act, whichever is the lowest; and
- (b) in respect of the goods, which were subjected to the tax at the first stage under the repealed Act, and the tax has not been charged separately, the input tax shall be calculated by the following formula , namely : -
- ¾ P x R
- 100 + R
- Explanation : - “P” is the purchase price of eligible goods held in stock
- “R” is the rate of tax on goods prevailing on the day, preceding the appointed day or the rate of tax applicable on the day of its purchases under the repealed Act or the rate of tax under the Act, whichever is the lowest.
(4) The designated officer shall verify the claim for the input tax credit within a period of sixty days from the date of filing the statement of tax paid goods held in stock so as to determine the amount of input tax credit available to the taxable person. Such credit shall, then be availed of proportionately over a period of one year, commencing after the expiry of three months from the appointed day. (5) Where the taxable person in a tax period of return period has made any consignment or branch transfer of goods, the input tax credit, shall be reduced by the following formula, namely : -
- ST x BT x 4
- N x (GT+BT) x 100
- Explanation : - “ST” is the value of stock of goods in respect of which the ITC is calculated in sub-rule (3) of this rule.
“BT” is the total value of consignment or branch transfers of taxable goods in the course of inter-state trade or commerce made in
the tax period or return period.
“GT” is the gross turnover of sales (including inter-state sales) during the tax period or return period but excluding the tax amount.
- “N” is the number of tax period or return period falling within a period of twelve months commencing after the expiry of three months from the appointed day.
(6) The provisions of sub-rules (1) to (5), shall apply mutatis mutandis to the goods first purchase or first sale which have suffered tax either at mentioned in Schedule –D of the repealed Act.
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