ITC Blocked

Input tax credit (ITC) can be blocked or restricted for certain goods and services used in the manufacturing process of the brick industry. The specific rules and regulations regarding ITC blocking fall under Section 17 of the CGST Act.  Here are some common examples of when ITC may be blocked or restricted:

1. Inputs used for non-business purposes: Input tax credit cannot be claimed on goods or services used for non-business purposes, such as personal use or for a non-business event.
2. Inputs used for exempt supplies: If the bricks manufactured by the industry are exempt from GST, then input tax credit cannot be claimed on the inputs used in their manufacturing.
3. ITC shall not be allowed If a brick manufacturer has opted normal tax scheme @ 6% as per Present GST Tax Structure.
4. Inputs used for employee welfare: Input tax credit cannot be claimed on goods or services used for employee welfare, such as meals or insurance related expenses.
5. Motor vehicles: Input tax credit is not allowed in case of motor vehicle used for  transportation of person where sitting capacity is less than 13 person including driver. So if brick industry is purchasing motor vehicle which can be car or traveller having sitting capacity lesss than 13 person in that case ITC will be blocked despite of uses are in business.
6. Works contract services: Input tax credit may be blocked or restricted for works contract services, which are services related to construction or building work. Let understand with an example. Brick industry get constructed office from a Work contractor at brick kiln premises for its staff or manager to look after day to day activities, The ITC on input of such goods or services will not allowed.

FAQs

Q: What is the GST rate on bricks?

A: At present GST rates on bricks is 12%. However, Tax payer has option to go with rate of 6% without ITC.

Q: Can I claim input tax credit (ITC) on GST paid on Goods and services used to manufacture bricks?

A: Yes, brick manufacturers can claim input tax credit (ITC) on the GST paid on raw materials such as cement, sand, Coal and other inputs  and input services used to manufacture bricks with subject to conditions stipulated in Section 17 of the CGST act. Further, if tax payer opts lower rate of GST @ 6% then ITC would not be allowed on tax paid on inputs and input services.

Q: Are there any exemptions or special provisions for the brick industry under GST?

A: No, Earlier certain types of bricks such as fly ash bricks and building bricks made of clay or cement had lower rate of tax @5%. At present Tax payer has limited option to opt tax rate @ 6% without ITC.

Q: Do brick manufacturers need to register under GST?

A: Yes, As per changed threshold limit now brick manufacturers with an annual turnover of Rs. 20 lakhs or more are required to register under GST. However, the threshold limit for registration is Rs. 10 lakhs for manufacturers in Northeastern states and hilly regions.

Q: How can brick manufacturers comply with GST regulations?

A: Brick manufacturers can comply with GST regulations by registering under GST, filing GST returns on time, and maintaining proper records of GST transactions. They can also seek the help of a tax consultant to simplify the compliance process.

Q: Can Tax payer charges 6% GST on one bill and 12% on another bill for the supply bricks as per current GST Structure?

A: It should be opted transaction wise and records should also be according to such claims of lower rate scheme as ITC is not allowed if tax payer opts Lower rate @6% while on the other hand Supply @ 12% allows input tax credit. So notification related to supply @ 12% or at lower rate of 6% should be interpreted on the basis of transaction. However opting both rates demands proper compliances as well as records.

Q: Is there any composition scheme exist in new GST Structure for Brick Industry?

A: no, at present, tax payer have only normal tax rate scheme with rates of 12% with ITC and Lower rate of 6% without ITC.

Q: Like in old GST Structure for Brick Industry where Composition scheme was available, is tax payer required to issue any document as per present GST Structure where lower rate of 6% is available ?

A: Present GST Structure only provide a facility of lower rate of 6 % where supplier can not avail ITC on inputs and input services. However, recipient is allowed to avail and utilize ITC on GST paid on goods or services supplied by Brick industry even at lower rate of 6%. So, supplier, i.e. brick industry is required to issue Tax invoice whether charging GST@ 12% or at 6%. There is no Bill of supply concept in present GST Structure for supply of taxable items.