Q. 222 ABC & XYZ are running Chit Fund Business”. Example: Now XYZ generated invoice ABC as below calculation. Taxable (Bid) amount: 10,00,000. GST @ 12% : 1,20,000. Invoice value: 11,20,000. Since both are running Chit fund business, can ABC claim input tax credit of Rs. 1,20,000/- paid on bid amount to XYZ. Kindly do the needful ?

Ans. Since both the companies are chit fund companies, therefore ITC can be claimed as a B2B transaction. Chit fund companies fall under the definition of miscellaneous NBFCs. Hence, relevant ITC provisions applicable to NBFC would be applicable to chit fund companies as well. In the above case, there are two ways to claim ITC under GST law which are as follows :- Section 17(2), claim eligible ITC after applying rule 42 and rule 42 of the CGST rules or, Section 17(4) read with rule 38 of the CGST rules, limit ITC availment to 50% of ITC and the remaining ITC shall lapse.