Input Tax Credit
(1) Subject to the provisions of this Act, for the purpose of calculating the tax payable by a registered dealer for any tax period after being registered, an input tax credit as determined under this Section shall be allowed to such registered dealer for the tax paid or payable in respect of all taxable sales other than any other sales as may be prescribed, or purchases under Section 10 during that period,
(2) The input tax credit to which the registered dealer is entitled shall be the amount of tax paid by the registered dealer to another registered dealer, on his turnover of purchases made during any tax period, intended to be used for the purposes and subject to the conditions as specified in sub-section (3), sub-section (4), sub-section (5) and sub-section (6) and calculated in such manner as may be prescribed.
(3) Subject to such conditions and restrictions as may be prescribed, partial or proportionate input tax credit may be allowed in such cases as may be used or consumed for their respective uses.
(4) Input Tax credit shall be allowed on purchase of goods made within the State of Jharkhand from a registered dealer holding a valid certificate of registration and which are intended for the purpose of-
(i) sale or resale by him in the State of Jharkhand or
(ii) sale in course of interstate trade and commerce or
(iii) use as raw material, or for direct use in manufacturing or processing of goods for sale, or for directly use in mining, or for use as capital goods, other than those goods exempt from tax under this Act and the goods specified in Part E of schedule II, intended for sale in the State of Jharkhand or in the course of interstate trade and commerce; or
(iv) sale in the course of export out of the territory of India; or
(v) for use as containers for packing of goods for sale or resale or for export out of the territory of India other than those exempted from tax under this Act and goods mentioned in Part E of Schedule II of this Act, for sale or resale in the State of Jharkhand or in the course of interstate trade and commerce.
Provided that if purchases are used partially for the purposes specified in this sub-section, input tax credit shall be allowed proportionate to the extent they are used for the purposes specified in this sub-section.
(vi) sale by a dealer having business under a SEZ; or a STP; or a EHTP; or by an EOU.
(vii) sale by dealers having business, located within SEZ to another unit located in SEZ.
(viii) sale by dealers: inter-alia between whose units are referred to as, Export Oriented Units.
(ix) sale by dealers, whose business is located within SEZ, to another unit as: “Export Oriented Unit”.
(5) Input Tax credit on capital goods other than those mentioned in Appendix I of this Act, shall be limited to plant, machinery and equipment directly connected with the manufacturing or processing of the finished products and directly for use in mining and input tax credit as admissible under this Section shall commence from the date of commencement of commercial production and shall be adjusted against tax payable on output, up to the period of three years;
Provided that in case of closure of business before the period specified above no further input tax credit shall be allowed and input tax credit carried forward, if any, shall be forfeited.
Provided further that input tax credit for “start up business” period shall be limited to the immediately last three preceding years, from the date of commencement of its commercial production.
(6) Input Tax credit shall not be claimed by the dealer until the tax period in which the dealer receives the tax invoice in original containing the prescribed particulars of the sale evidencing the amount of input tax paid.
Provided that input tax credit shall be claimed by a registered dealer on the tax paid, on the entry of goods mentioned in schedule III evidencing the amount of tax paid, as prescribed.
Provided further that for good and sufficient reasons, to be recorded in writing, where a registered dealer is prevented from producing the Tax Invoice in original or evidence of payment of tax paid on entry of goods, in original, the prescribed authority may allow, such input tax credit as prescribed.
(7) A registered dealer who intends to claim input tax credit under sub-section (1) shall, for the purpose of determining the amount of input tax credit, maintain accounts, and such other records as may be prescribed in respect of the purchases, entry of scheduled goods into a local area and sales made by him in the State of Jharkhand.
(8) No input tax credit under sub-section (1) shall be claimed or be allowed to a registered dealer-
(i) in respect of any taxable goods under this Act purchased by him from another registered dealer for resale but given away by way of free sample or gift;
(ii) who has been permitted by the Commissioner to make payment of presumptive tax or under scheme of composition at a percentage of turn over of sales or otherwise in lieu of tax as provided under Section 22 and 58;
(iii) in respect of capital goods, other than those directly used for manufacturing or processing of goods for sale or in mining;
(iv) in respect of goods brought from outside the State against the tax paid in other States or otherwise;
(v) in respect of stock of goods remaining unsold at the time of closure of business;
(vi) in respect of goods purchased on payment of tax, if such goods are not sold because of any theft or otherwise;
(vii) where the tax invoice is,-
(a) not available with the dealer, or
(b) there is an evidence that the same has not been issued by the selling dealer from whom the goods are purported to have been purchased;
(viii) in respect of goods purchased from a dealer whose certificate of registration has been suspended;
(ix) in respect of goods used for manufacture of goods for transfer of stock, or other than by way of sale or for sale outside the State of Jharkhand;
Provided that in respect of transactions falling under this clause, input tax credit may be allowed on the tax paid in excess of 4% on the such materials used in the manufacture of the finished products.
(x) in respect of sales exempted from tax as specified in Schedule I;
(xi) in respect of capital goods used for manufacturing or processing of goods for sale or directly for use in mining, where the finished products are dispatched other than by way of sales;
(xii) capital goods mentioned in negative list as in appendix I;
(xiii) goods mentioned in Part E of schedule II of the Act;
(9) If goods purchased are intended for use specified under sub-section (4) or loss of goods arising out of theft or destruction for any reason or the Stock of goods remaining unsold at the time of closure of business and are subsequently used, fully or partly, for purposes other than those specified under the said sub-section, the Input Tax Credit already availed, at the time of such purchase shall be proportionately deducted from the Input Tax Credit, for the period during which the said utilization has taken place:
Provided that if part of the goods purchased are utilised otherwise or lost or remain unsold, the amount of reverse tax credit shall be proportionately calculated in a manner, prescribed.
(10) The methods that are used by a registered dealer in a tax period to determine the extent of availing the Input Tax Credit to which goods are used, consumed or supplied or intended to be used, in the course of making taxable sales, shall be fair and reasonable or as prescribed. In the circumstances if any other methods are used, the prescribed authority may, after giving sufficient reason in writing, reject the method adopted by the registered dealer and calculate the amount of input tax credit after giving the registered dealer concerned an opportunity of being heard.
(11) The State Government may, by notification in the official gazette, specify any goods or class of dealers that shall not be entitled to full or partial input tax credit.