GST में Block ITC की Practical Working समझें ft @skillvivekawasthi

Summary

This video provides a detailed explanation of handling blocked Input Tax Credit (ITC) under GST, specifically in cases where ITC cannot be availed on certain expenses or assets. It covers the accounting treatment for blocked ITC, including capitalizing the blocked GST as part of the asset's cost and the depreciation process. The video also guides how to report ineligible ITC accurately on the GST portal, especially within GSTR 3B, ensuring compliance and avoiding errors. Practical examples of capital goods and service-related expenses are discussed, providing clarity on the process for businesses managing blocked ITC.

Takeaways

• 😀 Blocked ITC refers to situations where GST input credits cannot be claimed for certain goods or services, such as motor vehicles, construction services, and capital assets.
• 😀 Blocked ITC must be added to the cost of capital assets, such as buildings and machinery, rather than being recorded as an input credit.
• 😀 Expenses related to blocked ITC, like food and beverage expenses, must also include the GST as part of the overall cost, impacting the profit and loss statement.
• 😀 Businesses need to adjust their accounting records by including blocked ITC in the capital asset cost, which affects depreciation calculations.
• 😀 In GSTR-3B, businesses must report both eligible and ineligible ITC, where blocked ITC is categorized as ineligible and should be reversed or accounted for as part of the asset or expense cost.
• 😀 When reporting blocked ITC in GSTR-3B, businesses should ensure they distinguish between eligible and ineligible ITC and reverse any blocked ITC correctly in the appropriate section.
• 😀 Blocked ITC for capital assets like buildings and machinery must be reported in the GST portal as part of the asset's cost, and depreciation will be calculated on the entire cost, including GST.
• 😀 If GST is blocked on purchases such as food and beverages, the GST amount must be accounted for as part of the expense and cannot be treated as input tax credit.
• 😀 Blocked ITC can be reversed or adjusted in the GST return, ensuring businesses maintain compliance and correctly reflect their tax liabilities.
• 😀 It's important to differentiate between eligible ITC, which can be claimed, and ineligible ITC, which cannot be claimed due to specific restrictions under GST laws.
• 😀 Proper handling of blocked ITC ensures businesses avoid penalties or issues with GST compliance while accurately reporting tax obligations on the portal.

Q & A

What is the main topic of the video script?

The main topic of the video is about understanding the accounting treatment for block input tax credit (ITC) under GST, including how to handle blocked ITC and its reporting on the GST portal.

What is blocked ITC, and why can't it be claimed?

Blocked ITC refers to input tax credit that is not eligible for claim under certain conditions, such as when the goods or services fall under the blocked list as per GST law. For example, services related to construction of buildings may not be eligible for ITC.

How should blocked ITC be treated in the accounting records?

Blocked ITC should be added to the cost of the capital asset or relevant expense, as it cannot be claimed as a tax credit. It essentially becomes a part of the overall cost for the business.

What happens to the GST on a capital asset if ITC is blocked?

If ITC is blocked on a capital asset, the GST paid on the asset must be included in the cost of the asset, and depreciation should be claimed based on the total cost, including the blocked GST.

How does the GST portal handle ineligible ITC?

On the GST portal, ineligible ITC should be reported under the 'ineligible ITC' section in Table 4 of the GSTR 3B form. This is where businesses need to account for any blocked ITC that cannot be claimed.

What is the significance of Table 4 in GSTR 3B for reporting ITC?

Table 4 of the GSTR 3B form is used to report both eligible and ineligible ITC. Businesses need to ensure that any ineligible ITC, including blocked ITC, is correctly reported in this section to avoid discrepancies with the tax authorities.

Can blocked ITC be included in the cost of land or building?

Yes, blocked ITC can be included in the cost of land and building if the GST paid on the purchase of such assets is blocked, and this amount becomes part of the cost for depreciation purposes.

What happens if the ITC is blocked on food and beverage expenses?

If ITC on food and beverage expenses is blocked, the GST paid on these expenses becomes part of the overall expense and cannot be deducted. It will be shown as a regular expense in the Profit and Loss (PNL) statement.

Is it possible to claim depreciation on assets with blocked ITC?

Yes, businesses can claim depreciation on assets, including the GST amount that has been blocked. The blocked GST becomes part of the cost of the asset, and depreciation can be claimed on this total cost.

How should businesses handle a scenario where they cannot claim ITC due to blocked conditions?

In such cases, businesses need to report the blocked ITC as ineligible in GSTR 3B and include it in the cost of the asset or expenses. This ensures compliance with GST laws and proper accounting treatment.