ITC on Prepaid expense, Goods and Services Tax - GST

[Narayan Pujar]

Hi,

Is there a need to reverse Input Tax Credit on prepaid expenses? Are there any case laws in this regard.

Thank you in advance.

Posts / Replies

[RaamSrinivasan Kalpathi]

IMHO no reversal is required.  Explanation to Sec.13(2) of CGST Act clearly delineates 

"the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment"

ITC can be availed on or after the date of the service invoice.

[Ganeshan Kalyani]

Sir, can you please elaborate your query.

[KASTURI SETHI]

Dear Querist,

What types of pre-paid expenses are involved ? Pl. elaborate with an illustration for correct and complete reply.

[Narayan Pujar]

Hi,

In case of Fire Insurance for Stock which is taken for calendar year, half of the expense belongs to current FY and the other half to subsequent FY. Here, the assessee is eligible for the ITC. But the question is how much of it?

Since the half of the expense is being considered as received in next FY, thereby treating it as prepaid in current FY, does it also imply that I am not eligible to credit proportionate to this half as per Section 16(2)(b)?

[Shilpi Jain]

Agree with view given by Mr. RaamSrinivasan Kalpathi