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A banking company chooses not to apportion its common input tax credit under Section 17(2) of the CGST Act, 2017. What does Section 17(4) allow it to do instead?

Question and options

A banking company chooses not to apportion its common input tax credit under Section 17(2) of the CGST Act, 2017. What does Section 17(4) allow it to do instead?

  1. Avail the full eligible credit, reversing 50% at the end of each financial year

  2. Avail 50% of the eligible credit every month, carrying the rest forward

  3. Avail 50% of the eligible credit at the end of each financial year

  4. Avail 50% of the eligible credit every month, the rest lapsing

Answer and explanation

Correct answer: D - Avail 50% of the eligible credit every month, the rest lapsing

Section 17(4) of the CGST Act, 2017 gives a banking company or financial institution accepting deposits or extending loans the option, instead of apportioning under section 17(2), to avail every month 50% of the eligible input tax credit on inputs, capital goods and input services in that month; the rest lapses. Credit on supplies from another registered person with the same PAN is not restricted to 50%.

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