Full ITC available even for supply at concessional rate, says AAR

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New Delhi | Published: July 14, 2018 7:00:10 AM

Businesses supplying goods at a concessional GST rate are allowed to avail of input tax credit (ITC) on raw materials, the Authority for Advanced Ruling (AAR) in Telangana said.

Full ITC, AAR, GST , Manjira Machine Builders, input tax creditThe GST Council had approved a concessional GST rate of 5% on scientific and technical equipment supplied to public-funded research institutions.

Businesses supplying goods at a concessional GST rate are allowed to avail of input tax credit (ITC) on raw materials, the Authority for Advanced Ruling (AAR) in Telangana said. The GST Council had approved a concessional GST rate of 5% on scientific and technical equipment supplied to public-funded research institutions.The applicant, Hyderabad-based Manjira Machine Builders, had sought clarification from the AAR on the matter as it sells products to institutions such as the Defence Research and Development Organisation labs and Indian Space Research Organisation.

Although the notification regarding concession was issued for integrated GST, the AAR ruled that the reduced rate would also apply in case of supply made within the state, with both central GST and state GST being applicable at 2.5%. Availability of full ITC even if supplies are made under concessional rate of tax would result in inverted duty structure, which had created apprehension among some taxpayers. This ruling has clarified that full ITC would be available to the industry even for supplies made at concession GST rate,” Rajat Mohan, partner, AMRG & Associates, said.

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