Conditions for taking Input Tax Credit under GST

Sec­tion 16 of CGST Act 2017 deals with con­di­tions on tak­ing Input tax Credit:

1)  Every reg­is­tered per­son shall, sub­ject to such con­di­tions and restric­tions as may be pre­scribed and in the man­ner spec­i­fied in sec­tion 49, be enti­tled to take cred­it of input tax charged on any sup­ply of goods or ser­vices or both to him which are used or intend­ed to be used in the course or fur­ther­ance of his busi­ness and the said amount shall be cred­it­ed to the elec­tron­ic cred­it ledger of such.

 

2) Notwith­stand­ing any­thing con­tained in this sec­tion, no reg­is­tered per­son shall be enti­tled to the cred­it of any input tax in respect of any sup­ply of goods or ser­vices or both to him unless,––

• he is in pos­ses­sion of a tax invoice or deb­it note issued by a sup­pli­er reg­is­tered under this Act, or such oth­er tax pay­ing doc­u­ments as may be prescribed;
• he has received the goods or ser­vices or

Expla­na­tion.—For the pur­pos­es of this clause, it shall be deemed that the reg­is­tered per­son has received the goods where the goods are deliv­ered by the sup­pli­er to a recip­i­ent or any oth­er per­son on the direc­tion of such reg­is­tered per­son, whether act­ing as an agent or oth­er­wise, before or dur­ing move­ment of goods, either by way of trans­fer of doc­u­ments of title to goods or otherwise;

• sub­ject to the pro­vi­sions of sec­tion 41, the tax charged in respect of such sup­ply has been actu­al­ly paid to the Gov­ern­ment, either in cash or through util­i­sa­tion of input tax cred­it admis­si­ble in respect of the said sup­ply; and
• he has fur­nished the return under sec­tion 39:

Pro­vid­ed that where the goods against an invoice are received in lots or instal­ments, the reg­is­tered per­son shall be enti­tled to take cred­it upon receipt of the last lot or instalment:

Pro­vid­ed fur­ther that where a recip­i­ent fails to pay to the sup­pli­er of goods or ser­vices or both, oth­er than the sup­plies on which tax is payable on reverse charge basis, the amount towards the val­ue of sup­ply along with tax payable there­on with­in a peri­od of one hun­dred and eighty days from the date of issue of invoice by the sup­pli­er, an amount equal to the input tax cred­it availed by the recip­i­ent shall be added to his out­put tax lia­bil­i­ty, along with inter­est there­on, in such man­ner as may be prescribed:

Pro­vid­ed also that the recip­i­ent shall be enti­tled to avail of the cred­it of input tax on pay­ment made by him of the amount towards the val­ue of sup­ply of goods or ser­vices or both along with tax payable thereon.

 

3) Where the reg­is­tered per­son has claimed depre­ci­a­tion on the tax com­po­nent of the cost of cap­i­tal goods and plant and machin­ery under the pro­vi­sions of the Income-tax Act, 1961, the input tax cred­it on the said tax com­po­nent shall not be

 

4) A reg­is­tered per­son shall not be enti­tled to take input tax cred­it in respect of any invoice or deb­it note for sup­ply of goods or ser­vices or both after the due date of fur­nish­ing of the return under sec­tion 39 for the month of Sep­tem­ber fol­low­ing the end of finan­cial year to which such invoice or invoice relat­ing to such deb­it note per­tains or fur­nish­ing of the rel­e­vant annu­al return, whichev­er is earlier.