ITC can be claimed under the marginal regime on rent, advertising expenses, commission, professional expenses: AAR

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The Karnataka Advance Ruling Authority (AAR) held that the input tax credit (ITC) under the marginal regime on expenses such as rent, advertising expenses, commissions, professional expenses and other similar expenses is subject to sections 16 to 21 and to Rules 36 to 45 of the 2017 CGST Law and Rules.

The bench of two members of MP Ravi Prasad and Kiran Reddy T. observed that CTI can be claimed on capital goods under the marginal regime, subject to Articles 16 to 21 and Rules 36 to 45 of the CGST Act and Rules 2017.

The plaintiff is in the business of selling used gold jewelery (second-hand goods). The applicant is following the “marginal scheme” to discharge the GST liability under Rule 32(5) of the CGST Rules 2017. Under Rule 32(5), the value of the tender is the difference between the sell price and the buy price and is ignored if the bid value is negative.

The plaintiff requested the advance ruling on whether a plaintiff who falls under the fringe regime can claim an input tax credit on expenses such as rent, advertising expenses, commission, business expenses, and expenses. ‘other expenses.

Another issue raised was whether ITC can be claimed on capital goods for the claimant under the marginal regime.

Article 16 of the 2017 CGST Law deals with the eligibility and conditions to benefit from the input tax credit, and nothing prevents the registered taxpayer from claiming the input tax credit on services. inputs and corresponding expenses such as rent, advertising expenses, commissions, professional expenses, other similar expenses and capital goods while under the margin regime (Rule 32(5) of the CGST Regulations ).

The AAR observed that the claimant may claim input tax credits on expenditures for input services and capital goods, subject to sections 16 through 21 and rules 36 through 45 of the Act and of the 2017 CGST rules.

Applicant Name: Attica Gold Private Limited

Date: 27.10.2022

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