Basics of Input Tax Credit under GST

What do you mean by Input Tax Credit under GST?

Input tax credit means reducing the amount of tax (CGST, SGST, IGST) paid on the purchase of taxable Goods & services or tax paid under reverse charge from the Output liability and paying the balance amount to the Government.

Who is eligible to book Input Tax Credit (ITC)?

Every Registered person can claim the Input Tax credit on Fulfillment of all the following conditions:-

• He is in possession of a tax Invoice or debit note issued by the registered supplier.
• He has received the goods or services or both.
• The tax charged in respect of such supply has been actually paid to the Government.
• He has furnished the return U/s 39.
• When goods are received in installments then ITC can be claimed only when the last lot is received.
• No ITC will be allowed where the depreciation has been claimed on tax component of the cost of the capital goods & Plant and machinery.

It has been further provided that where the payment of value of the goods or services or both along with tax payable thereon has not been paid within 180 days from the date of invoice, The ITC claimed by the recipient on such supply shall be added to his output tax liability and shall be again allowed to take input of such credit when the payment is made.

Documentary requirements & conditions for claiming ITC

ITC can be claimed by the registered person on the basis of following documents:-

• Tax invoice issued by the supplier of goods or services or both.
• Debit note issued by supplier as per the provisions of Sec-34.
• A bill of entry in case of imports.
• Tax invoice or credit note issued by Input Service Distributor.
• An invoice issued U/s 31(3)(f) of CGST Act.

Blocked Credit under GST

The amount of credit is not available in following cases:-

• On exempt supplies.
• Motor Vehicles and other conveyances with certain exemptions.
• The supply of Food & Beverages, outdoor catering, beauty treatment, health services, Cosmetic & Plastic surgery.
• Membership of club, health & fitness centre.
• Rent-a-cab, life insurance and health insurance.
• Travel benefits extended to employees on vacation.
• Works contract services when supplied for construction of an immovable property.
• Goods or services or both received by taxable person for construction of immovable property ( other than Plant & Machinery) for his self use.
• Goods or servies on which tax has been aid under composition scheme.
• Goods or services or both received by Non-resident taxable person except on imports made by him.
• Goods or services or both used for personal consumption.
• Goods lost, stolen, destroyed, written off or disposed off by way of gift or free samples.
• Any tax paid u/s 74, 129 and 130.

Mallika Gulati

(CA final Student)