Ganesh opted for composition scheme under GST at the time of his registration. He purchased a plant for ₹42 lakhs on 29th September, 2019 and paid GST @ 18%. The invoice was prepared by the supplier on 4th October, 2019

Yes, Ganesh is eligible to avail Input Tax Credit (ITC) on Plant. The total Input Tax Credit (ITC) on the plant shall be (₹42,00,000 x 18%) = ₹7,56,000 after deducting an amount equal to 5% per quarter of a year or part thereof from the date of invoice to the date of change of option. Accordingly, the period to be considered is from 04.10.2019 to 07.07.2020. That is (2+2) = 4 quarters. Computation of tax credit allowable Amount (₹) Total ITC on the plant (₹42,00,000 x 18/100) 7,56,000 Less: ITC to be adjusted (4 x 5% = 20%) 1,51,200 Tax Credit Allowed 6,04,800