INPUT TAX CREDIT ON GST

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Input Credit Mechanism is available to you when you are covered under the GST Act. So, if  you are a manufacturer, supplier, agent e commerce operator, aggregator, or any of the persons mentioned here, registered under GST, you are eligible to claim Input Credit for tax paid by you on your purchases.

What can be claimed as ITC?

ITC can be claimed only for business purposes.

ITC will not be available on goods or services exclusively used for:

  • Personal use

  • Exempt supplies

  • Supplies for which ITC is specifically not available

Reconciliation of ITC

ITC claimed by the person has to match with the details specified by his supplier in his GST return. In case of any mismatch, the supplier and recipient would be communicated regarding discrepancies after the filling of GSTR 3. 

Utilization on Input tax Credit

Documents Required for Claiming ITC

The following documents are required for claiming ITC

  1. Invoice issued by the supplier of goods/services

  2. The debit note issued by the supplier to the recipient (if any)

  3. Bill of entry

  4. An invoice issued under certain circumstances like the bill of supply issued instead of tax invoice if the amount is less than Rs 200 or in situations where the reverse charge is applicable as per GST law.

  5. An invoice or credit note issued by the Input Service Distributor (ISD) as per the invoice rules under GST.

  6. A bill of supply issued by the supplier of goods and services or both.

All these documents are to furnished at the time of filing form GSTR-2.

Conditions for availability of ITC by a registered taxable person-Sec16

  1. Basis-tax invoice/debit note issued by a registered supplier or other taxpaying document.

  2. Goods and or services have been received

  3. Tax actually paid by the supplier to the credit of the appropriate government,   either in cash or by utilization of ITC.

  4. He has Furnished the monthly return in Form GSTR-3 u/s 39

  5. Registered Person shall not be entitled to take ITC in respect of any invoice or debit note for supply after the due date of furnishing of the return for the month of September of the next financial year.

Do you have more queries regarding GST, input tax credit, and other things related to it? Feel free to reach out to us.

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