AAR allows input tax credit by debt settlement under GST regime

AAR ruled that the applicant could pay the consideration for inward supplies by way of setting off book debt

Companies can claim input tax credit (ITC) under the goods and services tax (GST) regime even if the liability to pay for inputs between them, including tax, is discharged through adjustments in their books, ruled an authority for advance rulings (AAR). 

The Bengal wing of AAR made the ruling while hearing a case relating to Senco Gold, a supplier of jewellery. The firm also operates a network of franchisee-operated stores.

Explaining the case, Harpreet Singh, partner at KPMG, said the applicant raised tax invoices on the franchisee for the supply of jewellery and for providing of franchisee support services. 

Correspondingly, the franchisee also