Input Tax Credit (ITC) eligible on capital goods under Marginal Scheme, ruled by the Authority for Advance Ruling (AAR).
The applicant M/s Attica Gold Private Limited engaged in the business of sale of used gold jewellery (second hand goods) buying from individuals who fall under the category of unregistered dealers.
According to the applicant, a person who deals in used goods is permitted to pay tax on margin, or the difference between the price at which the products are obtained and the value at which they are given. If there is no margin, the supply is not subject to the Goods and Services Tax (GST).
Additionally, it was said that input tax on a variety of expenses, such as rent, professional fees, and other expenses, is claimable in accordance with Section 16 of the Central Goods and Services Tax (CGST) Act, 2017 when all requirements are met without which a business cannot operate.
Chartered accountant Muniraju P.R. and their duly authorised representative made an appearance for a personal hearing and restated the details of their application.
The authority observed that the applicant wants to know whether they can claim ITC on the expenses like rent, advertisement expenses, commission, professional expenses, other like expenses while being under margin scheme.
The bench concluded that there is no restriction on the registered taxpayer’s ability to claim input tax credits on input services and corresponding expenses such as rent, advertisement expenses, commission, professional expenses, other like expenses, and capital goods while participating in the margin scheme (CGST Rule 32(5)).
The authority of members M.P. Ravi Prasad and Kiran Reddy T., the applicant can claim input tax credit on the expenses in respect of input services and capital goods subject to section 16 to 21 and rules 36-45 of CGST Act and Rules 2017.
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