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Apportionment of Input tax credit under GST-Section 17 of CGST Act

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ITC shall be apportioned in following cases:

Apportionment of credit when goods or services used for both business and other purposes: Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business.

Apportionment of credit when goods or services used for supplies including zero-rated supplies and exempt supplies [Section 17(2)]: Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies.

Valuation of Exempt Supply:(3) The value of exempt supply shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.

Option to banking company either to follow apportionment method or avail only 50% of eligible credit (4) A banking company or a financial institution including a non-banking financial company, engaged in supplying services by way of accepting deposits, extending loans or advances shall have the option to either comply with the provisions of sub-section (2), or avail of, every month, an amount equal to fifty per cent of the eligible input tax credit on inputs, capital goods and input services in that month and the rest shall lapse:

Option once exercised could be changed in next financial year: Provided that the option once exercised shall not be withdrawn during the remaining part of the financial year:

Restriction of only 50% of eligible credit not applicable on inter-branch supplies: Provided further that the restriction of fifty per cent shall not apply to the tax paid on supplies made by one registered person to another registered person having the same Permanent Account Number.

As per Rule: The Government may prescribe the manner in which the credit may be attributed.

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