Gst input credit on lying stock on gst transit day

Section 16 of the MGL disallows input tax credit on goods and services not intended to be used “in the course of business” or “for furtherance of business”. In fact, the credit chain ends when goods or services are sold to the final consumer for personal use. For example, a credit chain that started with the manufacture and sale of steel would end when a washing machine, made out of that steel, is sold for personal consumption.

This distinction between personal consumption and business consumption could very well become a litigious issue. The law provides that if any input is used partly for business and partly for non-business purposes, then credit would be available only to the extent it is attributable to business use. So strictly speaking partial credit could be disallowed on an office laptop if it’s also used to send personal email or make personal purchases from an eCommerce site – though that would be practically impossible to implement.