Amended and updated notes on section 18 of CGST Act, 2017. Detail discussion on provisions and rules related to availability of credit in special circumstances.
Chapter V (Sections 16–21) of the Central Goods and Services Tax Act, 2017 deals with the provisions related to input tax credit. Section 18 of CGST 2017 provides for availability of credit in special circumstances.
Recently, we have discussed in detail section 17 (Apportionment of credit and blocked credits) of CGST Act 2017. Today, we learn the provisions of section 18 of Central GST Act 2017.
Section 18 of the Central Goods and Services Tax Act, 2017 has been notified by the Ministry of Finance vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017. This notification was come into force from 1st July, 2017 i.e. the commencement date of section 18 is 1-7-2017.
| Name of Act | The Central Goods and Services Tax Act 2017 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Central Board of Indirect Taxes & Customs |
| Governing body | GST Council |
| Number of Chapters | 21 |
| Number of Sections | 174 |
| You are reading: | |
| Chapter No. | V |
| Chapter Name | Input Tax Credit |
| Section No. | 18 |
| Section Name | Availability of credit in special circumstances |
| Updated 2024 Edition | GST Law Book PDF |
Relevant Rules and Forms for GST Section 18:
- Rule 40: Manner of claiming credit in special circumstances
- FORM GST ITC-01: Declaration for claim of input tax credit under sub-section (1) of section 18
- Rule 41: Transfer of credit on sale, merger, amalgamation, lease or transfer of a business
- FORM GST ITC-02: Declaration for transfer of ITC in case of sale, merger, demerger, amalgamation, lease or transfer of a business under sub-section (3) of section 18
- Rule 41A: Transfer of credit on obtaining separate registration for multiple places of business within a State or Union territory
- FORM GST ITC-02A: Declaration for transfer of ITC pursuant to registration under sub-section (2) of section 25
- Rule 44: Manner of reversal of credit under special circumstances
- FORM GST ITC-03: Declaration for intimation of ITC reversal/payment of tax on inputs held in stock, inputs contained in semi-finished and finished goods held in stock and capital goods under sub-section (4) of section 18
- Rule 44A: Manner of reversal of credit of Additional duty of Customs in respect of Gold dore bar
Section 18 of Central GST – Availability of credit in special circumstances1
Section 18 of CGST Act 2017 shall come into force on 01.07.2017 vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017.
Section 18(1) of CGST Act
Section 18(1): Subject to such conditions and restrictions as may be prescribed—
- (a) a person who has applied for registration under this Act within thirty days from the date on which he becomes liable to registration and has been granted such registration shall 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 from which he becomes liable to pay tax under the provisions of this Act;
- (b) a person who takes registration under sub-section (3) of section 25 shall 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;
- (c) where any registered person ceases to pay tax under section 10, he shall be entitled to take credit of input tax in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately preceding the date from which he becomes liable to pay tax under section 9:
Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed; - (d) where an exempt supply of goods or services or both by a registered person becomes a taxable supply, such person shall 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 relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the day immediately preceding the date from which such supply becomes taxable:
Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed.
Section 18(2) of CGST Act
Section 18(2): A registered person shall not be entitled to take input tax credit under sub-section (1) in respect of any supply of goods or services or both to him after the expiry of one year from the date of issue of tax invoice relating to such supply.
Section 18(3) of CGST Act
Section 18(3): Where there is a change in the constitution of a registered person on account of sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed.
Section 18(4) of CGST Act
Section 18(4): Where any registered person who has availed of input tax credit opts to pay tax under section 10 or, where the goods or services or both supplied by him become wholly exempt, he shall pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods, reduced by such percentage points as may be prescribed, on the day immediately preceding the date of exercising of such option or, as the case may be, the date of such exemption:
Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger shall lapse.
Section 18(5) of CGST Act
Section 18(5): The amount of credit under sub-section (1) and the amount payable under sub-section (4) shall be calculated in such manner as may be prescribed.
Section 18(6) of CGST Act
Section 18(6): In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher:
Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of such goods determined under section 15.
- Section 18 of CGST Act 2017 shall come into force on 01.07.2017 vide Notification No. 9/2017-Central Tax, G.S.R. 658(E), dated 28.06.2017. ↩︎