GST Input Tax Credit (ITC) on Supply of Goods or Services Under GST Act

Input Tax Credit (ITC) Introduction:

Input Tax Credit is the tax that the buyer has to pay on purchasing of goods or services under the GST Act. In other words, it finds to reduce the payable output tax on account of sales. This tax applies to registered GST person for supplying of goods and services. Moreover, IGST will charge on imports and tariff payable under the mechanism of reverse charge.

If you are supplier, manufacture or any person and have registered under GST, then you definitely can claim Input Tax Credit on selling the goods and services to the buyers. However, the integrated goods and service tax will charge on import.


Claim for ITC under GST:

The person who has registered under GST can claim ITC only if he fulfils the following conditions.

The person has a tax invoice or note from a registered dealer.
The on who have received good and services
Returns should also have to file.
The tax could pay to the government on every purchase by the supplier via a cash or claiming the input tax credit.
ITC could claim only until the last lot received when goods and services are in instalments.
ITC only allows for supplier after depositing tax and supplier get the ITC after the validation of purchasing goods and services under GST.

Eligibility Criteria for claiming ITC Under GST:

The only person can claim for ITC who registered itself under the GST Act.
The supplier or manufacturer will apply for registration within 30 days from the date which is liable for registration will allow taking Input Tax Credit.
The person who has registration voluntarily can allow to taking Input Tax Credit to inputs stock or semi-finished goods.
The supplier who pays tax under composition scheme will allow to taking input credit to inputs stock or semi-furnished goods.
When exempted supplies shifted to the taxable supply which allows to taking Input Tax Credit from a buyer to input stocks.
Documents Required For ITC:

Invoice by the Supplier of Goods and Services
Debit Note by the Supplier
Billing Entry
Issue of invoice in case of an amount less than Rs 200 as per GST Law.
Invoice or credit note by the Input Service Distributors (ISD)
Supply bill by the supplier of goods.
Tenure to Obtain ITC:

ITC should take the due date of the return for September of next financial year.
There must be annual return filing for the relevant financial year.
A person can avail ITC up to 1 year from the date of issuance of a tax invoice and five years for capital goods.
Input Tax Credit Reversal:

ITC will reverse due to the following cases.

Issuance of a credit note to ISD by seller
Non-payment Invoices Within 180 days.
Input for personal use or exempted supplies
Capital goods for business and personal use
ITC reversed in case of less than required
Frequently Asked Question (FAQ):

Q1- Can a person take ITC without payment for the supply along with the tax to the supplier?

Yes, the person can ITC, but he will require to pay within 180 days from the date of issuance of invoice.

Q2-How can be registered person will entitle to ITC for goods in instalments or lots?

The registered person can claim for ITC until the receipt of last lot or instalments.

Q3- Can a recipient reclaim the credit in the case makes the payment after 180 days?

Yes, the recipient shall obtain the ITC for goods and services.

 Q4-What is the time limit for taking ITC?

I will not take after September on which annual invoice return filling date has taken.

Q5-What should be the recovery mechanism for availing bad credit?

The wrongly availed credit will recover from the registered person under Section 73 and 74 of CGST Act.

Drafted By:
CS.A.Maniraj.,B.Com.,ACS.,CA(Fin), Independent Director 
Certified CSR Professional., Certified GST Professional.

GST Input Tax Credit (ITC) on Supply of Goods or Services Under GST Act
Maniraj Anantham 1 March, 2024
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