EXAMPLE-123

M/s AB, trader in electronic goods is not registered under GST as their turnover is below threshold limit(20/ 10 lakh) and  he is mainly supplying goods to household consumers, who are not elgible for input tax credit. During the course of his business he started selling his goods to registred taxable persons who needed input tax credit. Now on 1st October he voluntarily applied for registration and registration certificate is issued on 15th October 2017. Whether M/s AB is eligible for taking ITC on stock. If Yes, calculate amount of ITC available, If M/s AB Traders have electronic goods of worth rupees 300000 on 31st September and 2 lakh worth of stock on 14th October on which GST is paid @ 18%. Determine the ITC available on stock.

Answer

Section 18(1) (b) provides that a person, who takes voluntary registration under section 25(3) shall, subject to such conditions and restrictions as may be prescribed, 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.

Thus, in view of above provision he is eligible to take credit of tax paid on stock held on 14^th October, 2017, immediate preceding date of grant of registration.

ITC on stock available =200000*18% = Rs. 36000