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A registered dealer buys ten laptops for resale, paying GST of ₹18,000 on each and meeting every condition for input tax credit. Six are sold, two are stolen from its godown, and two are given free…

Question and options

A registered dealer buys ten laptops for resale, paying GST of ₹18,000 on each and meeting every condition for input tax credit. Six are sold, two are stolen from its godown, and two are given free to customers in a sales promotion. Under section 17(5)(h) of the CGST Act, 2017, how much of the credit is blocked?

  1. ₹1,80,000

  2. ₹36,000

  3. Nil

  4. ₹72,000

Answer and explanation

Correct answer: D - ₹72,000

Section 17(5)(h) of the CGST Act, 2017 blocks credit on goods lost, stolen, destroyed or written off, or disposed of by way of gift or free samples. Both the two stolen laptops and the two given away in the promotion are caught, so credit of 4 × ₹18,000 = ₹72,000 is blocked, even though the gifts served a business purpose. Credit on the six laptops sold stays available.

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