Conditions to get Entitlement of Input Tax Credit under GST

You can be entitled for Input Tax Credit if you satisfy the below mentioned conditions:

To get the benefits of ITC, you must satisfy the following conditions:

• You must be registered as a taxable person under GST
• Goods & services on which you want to claim ITC, should have been used only for business purposes
• ITC can be claimed on taxable & zero rated supplies (exports).
• If the constitution of registered taxable person changes due to sale, merger or transfer of business, then unused ITC shall be transferred to the sold, merged or transferred business
• You can credit ITC in your Electronic credit Ledger on the common portal in a provisional manner as prescribed in the model GST law.
• To claim ITC, you need supporting documents like tax invoice, debit note, supplementary invoice, etc.
• You can claim ITC, if you have actually received some goods & services.
• To claim ITC, the Input Tax must be paid through electronic cash ledger or electronic credit ledger.
• It is mandatory to file all the applicable GST returns under section 27 like GST-1, 2, 2A, 6, 6A, 7, 7A.
• For goods which are received in lots, you can claim ITC only after you have received the final lot.

ITC is Not Available to be Claimed in the Following Cases, u/s 16(9):

• You cannot claim ITC for goods & services used for personal purposes.
• If you have acquired goods & services under a contract which results in contraction of immovable property other than plant & machinery.
• If you have paid tax on goods & services under GST composition scheme.
• If goods & services have been used to build immovable property other than plant & machinery & such property is not transferred.
• Such goods & services which have been used by employees for their personal consumption.
• If depreciation has been claimed on the cost of capital goods, then they are not eligible for Input Tax credit.

How Input Tax Credit should be Used?

1. If ITC has been received on account of CGST

• It should first be used to pay CGST.
• Then, any remaining amount should be used to pay IGST.
• Note that you cannot use ITC of CGST to pay SGST.

2. If ITC is received on account of SGST

• It should be used to pay SGST first.
• Then, any remaining amount should be used to pay IGST.
• Note that you cannot use ITC of SGST to pay CGST.

3. If ITC is received on account of IGST

• It should be used to pay IGST first.
• Then, any remaining amount should be used to pay CGST.
• The last priority should be given to payment of SGST.