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Banking company / financial institution can opt under Sec 17(4):
AStandard Rule 42/43 apportionment
BAvail 50% of eligible ITC each tax period (rest lapses), at company-wide option, exercised once per FY and not withdrawable
C100% credit always
DNil credit
Answer & Solution
Correct answer: B. Avail 50% of eligible ITC each tax period (rest lapses), at company-wide option, exercised once per FY and not withdrawable
1. Sec 17(4) gives banking companies, financial institutions and NBFCs the option to avail 50% of eligible ITC on inputs/capital goods/services in a tax period — the remaining 50% lapses.
2. Inter-branch services between distinct persons of the same entity are not subject to the 50% restriction.
3. Option once exercised cannot be withdrawn during the FY.
_Source: ICAI BoS CA Final Paper 8, Ch 6 "Input Tax Credit", §Sec 17(4)_
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