Q. We have made an export on the basis of a contract saying that the remittance against the consignment will be paid by the buyer on the basis of the London Metal Exchange rate prevailing at the time he receives the goods. The remittance received against that specific shipping bill is higher as compared to the FOB value declared in the shipping bill. Now, we want to apply for MEIS and want to claim incentive against the full amount of e-BRC, i.e. higher than the FOB value declared in the shipping bill. Is it possible?
Para 3.04 of the FTP says that the reward would be claimed on the realised FOB value of exports in free foreign exchange or on FOB value of exports as given in the shipping Bills, whichever is less. So, you cannot do much about what has happened. You have to take MEIS on the basis of the lower value declared in the shipping bill. In future, what you should do in such cases is to declare that the price is provisional and ask for provisional assessment of the shipping bill. When the payment comes in, you should ask for finalisation of shipping bill on the basis of actual amount realised. That way, you will be able to get MEIS on the basis of actual amount realised.
Q. In case of builders, the input tax credit is limited to the number of flats sold before getting the completion certificate. However, at the time of availing the credit (while the project is ongoing) it is not certain as to how many units will get sold before completion. Hence, the total input credit is availed. Now, when the completion certificate is obtained, there can be some units unsold, on which no GST is to be paid. Our question is: How much GST is to be reversed at the point of completion? Should total credit be apportioned based on completed unsold flats and flats sold before completion, or should the input tax related to procurements after completion be taken into consideration?
Rule 42 of the CGST Rules, 2017 prescribes the manner in which the input tax credit in respect of inputs or input services should be attributed for effecting taxable supplies, which attract the provisions of sub-section (1) or sub-section (2) of section 17, being partly used for effecting taxable supplies and partly for effecting exempt supplies. Similarly, Rule 43 of the said Rules prescribes the manner in which the input tax credit in respect of capital goods should be attributed for effecting taxable supplies, in similar situations. The apportionment should be based on the area of completed flats sold before completion certificate.
Q. As a pharmaceutical unit, we clear samples for free of cost distribution by physicians. Are we required to reverse the proportionate input tax credit?
Yes. Section 17(5)(h) of the CGST Act, 2017 requires you to reverse the proportionate input tax credit in case of clearance of physician samples for free distribution.