GST Input Tax Credit (ITC) – Key Considerations

Considering the increase in litigation due to the wrong availment of Input tax credit (ITC), here are the below pointers that need to be kept in mind by GST register buyers while availing the ITC.

• Possession of a tax invoice or debit note: Buyer must have possession of tax invoice and debit note. Further please note that tax invoices or debit notes should have the valid field as specified in Rule 46 and Rule 53 i.e. Name, GST No, Place of supply, HSN, GST rate, Invoice No not exceeding 16 digits, and many more. ITC of IGST paid on import of goods can be claimed as ITC basis Bill of entry.
• ITC should be available in GSTR 2B: Details have been furnished by the supplier in GSTR 1 and the same should be available in GSTR 2B of the buyer.
• Receipts of goods and services: Buyer must have received the goods and services. If the goods are received in installments, ITC can be availed when the last lots or installments are received.
• Payment of tax by supplier: Tax has been paid by supplier and GSTR 3B has also been furnished by supplier.
• Input tax credit should not be restricted u/s 38: ITC should not be available basis of various scenarios as specified in section 38 of CGST Act i.e. continuous default in payment of tax by the supplier, tax shown by the supplier in GSTR 1 is more that tax paid in GSTR 3B, etc. supplier has availed the excess ITC, etc.
• Payment to the supplier within 180 days: Payment to the supplier should be made within 180 days from the date of invoice. If payment is not made within 180 days, ITC should be reversed along with interest. However, ITC can be re-availed once the payment to the supplier is made. Further, please note that there is no time limit for re-availing of ITC once payment is made to the supplier.
• Due date for Availment of ITC: The time limit to avail the ITC against invoice or debit note should be earlier than 30^th November of the next financial year or the due date of filing the Annual return for that financial year. No ITC can be claimed beyond the aforementioned dates.
• Depreciation on GST portion: No ITC will be allowed if depreciation is claimed on the GST component of capital goods purchased.

• Blocked credit: Certain items are not eligible for availment of the ITC u/s 17(5) of CGST Act i.e. staff welfare expenses, rent cab services, health insurance of employee, membership of health & fitness center, tax has been paid under composition scheme etc.

For more details connect:

CA Pooja Gupta, Mob 7838968100, 9654346350   E-mail:  [email protected]