Change of Business : Can you claim Input Tax Credit under GST

By | January 16, 2018
(Last Updated On: January 16, 2018)

Will ITC on Capital Goods lapsed or to be reversed on change of business i.e. from business of manufacturing and selling of taxable article (on own self) to business of doing Jobwork of same taxable artice (for other)? If ITC is availabe, will it be set off against GST liability even after period of 5 years?

Section 16. (1) of CGST Act 2017 :  Every registered person shall, subject to such conditions and restric- tions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

In the above case, even if there is a change in the nature of business from manufacturing and selling to jobwork , in my opinion, as long as the capital goods are used for business purpose , ITC shall be allowed.

The time limit of availing ITC is earliest of due date of furnishing of the return u/s 39 for the month of September of the subsequent financial year or furnishing of the relevant annual return , whichever is earlier. Hence ITC will be allowed to be set off against the output GST liability within the above time period only.[section 16(4)]

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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 : Taxheal@gmail.com

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