Certificate under Section 18(1)(d) of the CGST Act

Independent Practitioner’s Certificate under the Central Goods and Services Tax Act, 2017 (in short “CGST Act”) and State Goods and Services Tax Act, 2017/Union Territory Goods and Services Tax Act, 2017 (in short “SGST/UTGST Act”) in terms of Section 18(1)(d) of the said Acts and Rule 40(1)(d) of the rules issued under such Acts

1. This Certificate is issued in accordance with the terms of our agreement dated …………………

2. In terms of Section 18(1)(d) of the CGST and SGST/UTGST Acts read with Rule 40 of the CGST and SGST/UTGST Rules, 2017, where an exempt supply by a registered person becomes taxable supply, the registered person is eligible to avail input tax credit in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock relatable to such exempt supplies and on capital goods exclusively used for such exempt supply on the day immediately preceding the date on which such exempt supplies become taxable supplies under the CGST and SGST/UTGST Acts i.e. __________ by declaring the same, electronically, on the Common Portal in Form GST ITC-01 (hereinafter referred to as the “Statement”). The details furnished in the above statement shall be duly certified by a practicing Chartered Accountant or a Cost Accountant where the aggregate claim exceeds Rs. 2 Lakhs.

3. The preparation of the Statement and declarations in relation to the stock required in terms of the CGST and SGST/UTGST Acts and Rules issued under the said Acts, is the responsibility of the Management of................................... [Name of the Applicant] including the preparation and maintenance of all accounting and other relevant supporting records and documents. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the statements and declaration and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

The management is also responsible for ensuring that the Applicant complies with the requirements of CGST and SGST/UTGST Act and CGST and SGST/UTGST Rules.

4. Management of the Applicant is responsible to conduct physical verification of inputs held in stock, semi- finished goods and finished goods held in stock and capital goods on the day immediately preceding _________, the date from which he becomes liable to pay tax under section 9 of the CGST Act and SGST/UTGST Acts.

5. Management of the applicant is responsible to ensure that books, records documents and information made available for purposes of verification are truthful and reliable, extracted from contemporaneous records for the purposes of establishing reliability of assertions made by them.

6. Pursuant to the requirements of Section 18(1)(d) of the CGST and SGST/UTGST Acts read with Rule 40(1)(d) of the CGST and SGST/UTGST Rules, 2017, it is our responsibility to provide a reasonable assurance that the details furnished in the declaration in Form GST ITC-01 have been accurately drawn from the books of accounts and other relevant documents / records of the Applicant;

We conducted our examination of the Statement in accordance with the Guidance Note on Reports or Certificates for Special Purposes (Revised 2016) issued by the Institute of Chartered Accountants of India. The Guidance Note requires that we comply with the ethical requirements of the Code of Ethics issued by the Institute of Chartered Accountants of India.

We have complied with the relevant applicable requirements of the Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements.

7. Based on our examination as above and the information and explanations given to us, in our opinion, the particulars declared by the Management of the Applicant as annexed herewith in Annexure - A are fairly presented in all material respects and in conformity with the books of accounts and other relevant documents/ records maintained under the CGST Act and the SGST/UTGST Acts.

8. The quantity and value of inputs, inputs contained in semi-finished or finished goods held in stock and capital goods is based on the calculations and confirmation done by the Management and verified by us along with the corresponding tax invoices and books of accounts and other relevant records and documents maintained by the Applicant.

9. The computation of input tax credit in respect of capital goods as reduced by the percentage points prescribed under Rule 40(1)(a) of the CGST and SGST/UTGST Rules, 2017 is enclosed as Annexure - B.

12. This certificate is addressed and provided to the …….. [Name of the Applicant] solely for the purpose of submission to (Name of the Authority) pursuant to the requirements of Section 18(1)(d) of the CGST and SGST/UTGST Acts read with Rule 40(1)(d) of the CGST and SGST/UTGST Rules, 2017 and should not be used by any other person or for any other purpose. Accordingly, we do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this certificate is shown or into whose hands it may come without our prior consent in writing.

Signature
(Name of the Member Signing the Certificate)
(Designation)
Membership Number:______
UDIN: ______

ANNEXURE - A

Date on which goods or services or both becomes taxable –

Sr. No.	GSTIN/Registration under CX/VAT of supplier	*Invoices/Bill of Entry**		Description of inputs held in stock, inputs contained in semi-finished or finished goods held in stock	Unit Quantity Code (UQC)	Qty	Value (As adjusted by debit note/credit note)	Amount of ITC claimed (Rs.)
		No.	Date					Central Tax	State Tax	UT Tax	Integrated Tax	Cess
1	2	3	4	5	6	7	8	9	10	11	12	13
(a) Inputs held in stock
(b) Inputs contained in semi-finished or finished goods held in stock
(c) Capital goods in stock**

* In case it is not feasible to identify invoice, the principle of first-in-first out may be followed.

** The detailed calculation provided in Annexure - B, be treated as part of this certificate.

Place of Signature: _____________
Date: ______________

As per our Certificate of even date attached
For XYZ and Co.
Chartered Accountants
Firm’s Registration Number: __________

Signature
Name of the Member Signing the Certificate
(Designation)
Membership Number: ______
UDIN: ______

Annexure - B : Computation of ITC on Capital Goods

SI. No.	Particulars	Reference	[Amount]
1	Inward supply value of Machinery X IGST @ 12%	a	12,50,000 1,50,000
2	Invoice Value Date of invoice		14,00,000 15^th July 2022
3	Date on which the Applicant is liable to pay tax u/s 9 of the CGST/SGST 2017		01^st March 2023
4	Number of quarters till 28^th February 2023	b	3
5	Reduction percentage prescribed per quarter / part thereof	c	5%
	Eligible ITC as on 1^st March 2023	d = (a - (abc))	1,27,500

Check points for the Chartered Accountants –

(i) Verify registration particulars with the Registration Certificate.

(ii) Do not take responsibility for filing the respective statutory form prescribed as the same is the responsibility of Management. Practitioner’s responsibility is to certify the details furnished in the declaration in Form GST ITC-01.

(iii) Check the books and records and other relevant documents and registers relating to quantity and value of inputs held in stock and inputs contained in semi-finished or finished goods held in stock relatable to such exempt supplies and capital goods exclusively used for such exempt supplies on the date immediately preceding the date on which such exempt supplies become taxable supplies under the CGST and SGST/UTGST Acts.

(iv) Check the basis of calculation of equivalent units of inputs contained in semi-finished and finished goods in stock.

(v) Ensure that the input tax credit on capital goods has been reduced by five percentage points per quarter of a year or part thereof, from the date of invoice.

(vi) Check if there is a depreciation claimed on the input tax credit portion of capital goods under the Income Tax Act, 1961. If depreciation has been claimed, then ensure that input tax credit on such amount has not been availed.

(vii) Obtain a list of existing capital assets with the purchase dates (for a period of 5 years). Cross check the listing with the fixed asset register maintained by the Applicant.

(viii) The books of accounts and other relevant documents / records of the Applicant should be thoroughly verified to identify the exempt supplies effected by the Applicant. The relevant notifications issued by the CBIC should also be meticulously perused and documented to identify the date on which such exempt supplies have become taxable supplies.

(ix) Make sure to obtain a statement from the Applicant detailing the listing of both stock and capital goods, including their respective quantities.

(x) Ensure that the claim of credits under this section is made only on inputs held in stock and inputs contained in semi-finished or finished goods held in stock relatable to such exempt supplies and capital goods exclusively used for such exempt supply. Where capital goods have been used for both taxable and exempt supplies, no input tax credit would be eligible to the Applicant.

(xi) Statement of bills of entry / tax invoices attributed by Management to be the goods in stock that are not older than 1 year on the day on which the Applicant is liable to pay tax (Section 18(2) of the CGST and SGST/UTGST Acts) may be collected from the Management and subjected to audit verification tests. The tax invoice must be the one containing the prescribed particulars (Section 16(2) of the CGST and SGST/UTGST Acts to be read with Rule 46 of the CGST and SGST/UTGST Rules, 2017).

(xii) Ensure that the debit notes / credit notes, if any, are recorded / accounted against the vendor invoice which are forming part of the closing inventory.

(xiii) Ensure compliance with Rule 40(1)(e) of the CGST and SGST/UTGST Rules, 2017 regarding verification of the credits claimed with the details furnished by the corresponding supplier in Form GSTR-1 or as the case may be, in Form GSTR-4 on the Common Portal.

(xiv) This certificate is required to be issued only if the aggregate value of the claim on account of CGST, SGST / UTGST and IGST exceeds rupees two lakhs. (Rule 40(1)(d) of the CGST and SGST/UTGST Rules, 2017) (xv) This certificate is to be issued in respect of a registered person who effects exempt supplies, those of which have become taxable supplies subsequently.

(xvi) Ensure that the certificate issued is in accordance with the Guidance Note on Reports and Certificates for special purpose issued by the ICAI.

(xvii) Ensure that a letter of representation is taken from the Management of the Applicant for the details and information provided by them.

(xviii) Check the period during which the Applicant has been effecting exempted supplies of_______ (HSN :____). Further, check the date from which such exempted supplies have become taxable and ensure that the Applicant has been discharging the applicable taxes on such supplies.