# Special Cases Enabling Availment of ITC [Section 18]
## When does Section 18(1) Apply?
Section 18 grants the right to claim ITC on existing stock when a taxpayer's status changes from a non-ITC position to an ITC-eligible position. There are four trigger events:
| # | Trigger Event | Eligible Credit | Effective Date for Stock |
|---|---|---|---|
| 1 | Composition supplier → Regular supplier | Inputs (RM/SFG/FG) + Capital Goods | Day immediately preceding date of liability to pay tax under regular scheme |
| 2 | Exempt supplies become Taxable supplies | Inputs (RM/SFG/FG) + Capital Goods | Day immediately preceding date exempt supply became taxable |
| 3 | Unregistered → Liable to register (applied within 30 days) | Inputs (RM/SFG/FG) only — No Capital Goods | Day immediately preceding date of becoming liable to register |
| 4 | Unregistered → Voluntarily registered | Inputs (RM/SFG/FG) only — No Capital Goods | Day immediately preceding date of grant of registration |
> Memory hook: Capital Goods credit is available only in cases 1 & 2 (where the person was already registered). For cases 3 & 4 (fresh registration), only input stock qualifies.
## Key Conditions for Availment
1. One-year invoice rule — ITC can be availed only if the invoice is not older than 1 year. This applies to capital goods also.
2. Capital goods reduction formula —
$$\text{ITC on CG} = \text{Total ITC} - (5\% \text{ per quarter or part of quarter from invoice date to availment date})$$
A 'quarter' under GST = Jan–Mar / Apr–Jun / Jul–Sep / Oct–Dec.
3. Exempt → Taxable carve-out: ITC on capital goods is available only if the supplier was already registered while making exempt supplies. If a person was unregistered during the exempt phase and registers when supply becomes taxable, no CG credit.
4. Form ITC-01 — Electronic declaration to be filed within 30 days from the relevant date, containing details of inputs and CG.
5. CA/CMA Certification — If aggregate credit (CGST + SGST/UTGST + IGST) exceeds ₹2,00,000, the declaration must be certified by a CA/CMA in practice.
## Decision Flow
```
Status Change?
↓
[Was the person already registered while in non-ITC state?]
├── Yes → Inputs + Capital Goods eligible
└── No → Only Inputs eligible (no CG)
↓
[Are invoices < 1 year old?] → if No, no credit
↓
[File ITC-01 within 30 days]
↓
[If credit > ₹2 lakh → CA/CMA certificate]
```