Carry forward of ITC on Stock of works contract service provider under GST : ICAI suggestions

By | August 15, 2017
(Last Updated On: August 15, 2017)

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

43. Credit of eligible duties and taxes in respect of inputs held in stock to a works contract service provider

Section 140(3) of the CGST Act, 2017 provides that a registered person, who was not liable to be registered under the existing law, or who was engaged in the manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of the benefit of notification No. 26/2012—Service Tax, dated the 20th June, 2012 or a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs
held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to specified conditions.


The above provision does not contemplate a situation where a service provider providing works contract services opts not to avail the benefit of notification No 26/2012 but valuation as per Rule 2A of Valuation Rules and pays service tax on service portion derived with under deduction method or percentage method.


It is suggested that the necessary amendment be made in Clause 140(3) to avoid the ambiguity by replacing the word “and” in the existing Clause 140(3) by “or who was”.

Read ICAI Suggestions on GST Act to Govt : July 2017

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About CA Satbir Singh

Chartered Accountant having 12+ years of Experience in Taxation , Finance and GST related matters and can be reached at Email :

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