Sub Section 2 of Section 18: ITC for Invoice upto 1 Year : 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.
Sub Section 3 of Section 18: Transfer of credit in case of sale, merger, demerger, amalgamation : 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 provision for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains unutilized in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed in rule 6.
As Per rule – 41 : Transfer of credit on sale, merger, amalgamation, lease or transfer of a business
(1) A registered person shall, in the event of sale, merger, de-merger, amalgamation, lease or transfer or change in ownership of business for any reason, furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the Common Portal along with a request for transfer of unutilized input tax credit lying in his electronic credit ledger to the transferee:
Provided that in the case of demerger, the input tax credit shall be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme.
(2) The transferor shall also submit a copy of a certificate issued by a practicing chartered account or cost accountant certifying that the sale, merger, de-merger, amalgamation, lease or transfer of business has been done with a specific provision for transfer of liabilities.
(3) The transferee shall, on the Common Portal, accept the details so furnished by the transferor and, upon such acceptance, the un-utilized credit specified in FORM GST ITC-02 shall be credited to his electronic credit ledger.
(4) The inputs and capital goods so transferred shall be duly accounted for by the transferee in his books of account.
Sub Section 4 of Section 18 : Reversal of ITC :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 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.
Sub Section 5 of Section 18 : 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.
Rule : 44 Manner of reversal of credit under special circumstances
(1) The amount of input tax credit relating to inputs held in stock, inputs contained in semi finished and finished goods held in stock, and capital goods held in stock shall, for the purposes of sub-section (4) of section 18 or sub-section (5) of section 29, be determined in the following manner namely,-
(a) for inputs held in stock and inputs contained in semi-finished and finished goods held in stock, the input tax credit shall be calculated proportionately on the basis of corresponding invoices on which credit had been availed by the registered taxable person on such input;
(b) for capital goods held in stock the input tax credit involved in the remaining useful life in months shall be computed on pro-rata basis, taking the useful life as five years.
Capital goods have been in use for 4 years, 6 month and 15 days.
The useful remaining life in months= 5 months ignoring a part of the month
Input tax credit taken on such capital goods= Ç
Input tax credit attributable to remaining useful life= C multiplied by 5/60
(2) The amount, as prescribed in sub-rule (1) shall be determined separately for input tax credit of integrated tax and central tax.
(3) Where the tax invoices related to the inputs held in stock are not available, the registered person shall estimate the amount under sub-rule (1) based on the prevailing market price of goods on the effective date of occurrence of any of the events specified in sub-section (4) of section 18 or, as the case may be, sub-section (5) of section 29.
(4) The amount determined under sub-rule (1) shall form part of the output tax liability of the registered person and the details of the amount shall be furnished in FORM GST ITC-03 where such amount relates to any event specified in sub-section (4) of section 18 and in FORM GSTR-10, where such amount relates to cancellation of registration.
(5) The details furnished in accordance with sub-rule (3) shall be duly certified by a practicing chartered accountant or cost accountant.
(6) The amount of input tax credit for the purposes of sub-section (6) of section18 relating to capital goods shall be determined in the same manner as prescribed in clause (b) of sub-rule (1) and the amount shall be determined separately for input tax credit of IGST and CGST. Where the amount so determined is more than the tax determined on the transaction value of the capital goods, the amount determined shall form part of the output tax liability and the same shall be furnished in FORM GSTR1.
Sub Section 6 of Section 18 : 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 i.e. 5 % Per Quarter or Part thereof [ Rule 40(2)]
-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 u/s 15.
Rule 40(2) : The amount of credit in case of capital goods or plant and machinery for purpose of 18(6), shall be calculated by reducing the input on tax on such goods at rate of 5% points for every quarter or part thereof from the date of the issue of invoice for such goods.