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Published on:
February 23, 2023
By
Paramita

Use of Input Tax Credit against GST in other state with same PAN

Input tax credit is a mechanism wherein the GST paid on purchases can be claimed as a credit against the GST payable on sales. This system ensures that taxes are not paid on taxes and that the final consumer bears the tax burden.

However, what happens when a business has operations in different states and has the same PAN number? Can the input tax credit be used against GST payable in other states? The answer is yes, but there are certain conditions to be fulfilled.

According to the GST Act, input tax credit can be availed on inter-state purchases only when the goods or services are used for business purposes. Additionally, the GST paid on purchases must be reflected in the GST returns filed by the taxpayer. This means that if a business purchases goods or services from a supplier in another state and uses them for business purposes, the GST paid can be claimed as input tax credit against the GST payable on sales in any state.

However, one important point to note is that the GST paid on inter-state purchases must be reflected in the GST returns filed by the taxpayer in the respective state where the purchases were made. This means that if a business has operations in multiple states and makes purchases from suppliers in various states, it must file separate GST returns for each state, reflecting the GST paid on inter-state purchases.

For example, if a business based in Maharashtra purchases goods from a supplier in Gujarat, the GST paid on the purchase must be reflected in the GST returns filed by the business in Gujarat. When the same business sells goods in Maharashtra, it can claim the GST paid in Gujarat as input tax credit against the GST payable on sales in Maharashtra.

Another important point to note is that while availing input tax credit on inter-state purchases, businesses must ensure that the supplier has registered under GST and has a valid GSTIN. Additionally, the invoice issued by the supplier must have the GSTIN of the supplier as well as the recipient.

In conclusion, input tax credit can be claimed against GST payable on sales in any state, provided the GST paid on inter-state purchases is reflected in the GST returns filed by the taxpayer in the respective state where the purchases were made. However, businesses must ensure that the supplier is registered under GST and has a valid GSTIN, and that the invoice issued by the supplier has the GSTIN of the supplier as well as the recipient.

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