The input tax rules set off rules allow businesses to claim a credit for GST paid on purchases against the GST they owe on sales. This helps to ensure that businesses only pay GST on the value of their taxable supplies. The set off rules also apply to import GST. businesses can claim a credit for the GST paid on imported goods against the GST they owe on their taxable supplies.
Limitations to set off Input Tax Credit
There are certain limitations to the set off of input tax credit. Firstly, the set off is available only against the tax payable on the same or similar goods or services. Secondly, the set off is not available if the tax invoice is more than 12 months old. Thirdly, the set off is not available if the goods or services are used for personal consumption. Lastly, the set off is not available if the tax invoice is not in the name of the registered person.
procedure to set off ITC in GST Return
The procedure to set off ITC in GST Return is as follows:
- Firstly, the taxpayer is required to furnish details of inward supplies in the GST return.
- After that, the taxpayer is required to furnish details of eligible ITC claimable in the return.
- Thereafter, the details of tax payable on outward supplies need to be declared in the return.
- Finally, the taxpayer is required to furnish the details of ITC set-off in the return.