Special Circumstances of ITC Transfer

There are three types of transfers or transactions where the government will transfer the ITC which was previously not granted to the taxpayer. These transfers are named on the basis of their actions vis a vis Retrospective Relief, Corporate Actions and Retrospective Taxation respectively.

Retrospective Relief: In this case, the government will give credit of an earlier ineligible input credit to the taxpayer either based on registration or if a previous exempt supply becomes newly taxable.

Corporate Actions: If a business transfers all its liabilities and assets to another business due to a change in constitution (as in the case of a sale, merger, demerger, amalgamation, lease or transfer of the business) then ITC will be available.

Retrospective Taxation: If a taxpayer forfeits credit earlier claimed from the government. It is opposite of the first situation. This means the taxable supplies are now exempt or chose composition scheme or is disposed of capital goods.