Documents Required for Claiming Input Tax Credit (ITC) under GST

Documents Required for Claiming Input Tax Credit (ITC) under GST

Input Tax Credit (ITC) is one of the core features of the Goods and Services Tax (GST) system in India. It allows registered taxpayers to reduce their tax liability by claiming credit for the GST paid on purchases or expenses used in the course of business. To claim ITC legally and correctly, certain conditions must be met and specific documents must be maintained.

1.Mandatory Conditions to Claim ITC

A registered person, including an Input Service Distributor (ISD), is eligible to claim ITC only when the following four primary conditions are fulfilled:

a) Possession of Valid Tax Invoice or Debit Note

The taxpayer must hold a valid Tax Invoice or Debit Note issued by a registered supplier of goods or services. The invoice should be compliant with GST rules, including:

• Name, address, and GSTIN of the supplier
• Invoice number and date
• Name, address, and GSTIN (if registered) of the recipient
• HSN/SAC code of goods/services
• Description, quantity, and value of goods/services
• Amount of tax charged (CGST/SGST/IGST)

Note: In case of missing or mismatched invoices, ITC may be denied or reversed.

• Case Law: State of Karnataka v. M/s Ecom Gill Coffee Trading Private Limited – Supreme Court of India, Civil Appeal No. 230 of 2023:  The Supreme Court, in this pre-GST era case, underscored the foundational importance of possessing a valid tax invoice for claiming ITC. It held that the burden of proof lies with the assessee to establish the genuineness of the transaction and the document. This principle continues to be applied stringently under the GST regime. 
• Case Law: M/s Bright Star Plastic Industries v. Additional Commissioner of Sales Tax Calcutta High Court, W.P.A. 426 of 2022): The Calcutta High Court held that ITC cannot be denied solely on the ground that the supplier’s registration was cancelled retrospectively. If the purchase was genuine and made when the supplier’s registration was active, the recipient’s right to ITC is protected, provided other conditions are met. This highlights the importance of due diligence at the time of the transaction.

b) Receipt of Goods or Services or Both

As per Section 16(2)(b) of the CGST Act, 2017The recipient must have actually received the goods or services. In case of goods received in lots or installments, ITC can be claimed only upon receipt of the last lot.

c) Tax Must Be Paid by the Supplier to the Government

As per Section 16(2)(c) of the CGST Act, 2017 The GST charged by the supplier must have been paid to the government, either through:

• Cash payment, or
• Input tax credit available to the supplier under Section 41 of the GST Act.

This ensures the ITC claimed is backed by actual tax remittance.

• Notification No. 39/2021-Central Tax, dated December 21, 2021: Section 16(2)(aa) The Finance Act, 2021, introduced a new condition, Section 16(2)(aa), which was notified effective January 1, 2022. It states that ITC on an invoice can be claimed only if the details of that invoice have been furnished by the supplier in their outward supplies statement (GSTR-1) and have been communicated to the recipient in their auto-generated statement (GSTR-2B). This makes supplier compliance a direct prerequisite for the recipient’s ITC.
• Case Law: M/s D.Y. Beathel Enterprises v. The State Tax Officer (Madras High Court), W.P.(MD) Nos. 2127 of 2021:  The Madras High Court read down the provision, stating that the recipient’s ITC cannot be denied without initiating recovery proceedings against the defaulting supplier first. It held that the tax authorities must first attempt to recover the tax from the seller before reversing the credit from the buyer.

d) Filing of GST Returns

As per Section 16(2)(d) of the CGST Act, 2017 The claimant must have filed valid GST returns under Section 39 of the GST Act (i.e., GSTR-3B monthly or quarterly, as applicable). ITC can only be claimed after the return for the relevant period has been filed.

2. List of Acceptable Documents for Claiming ITC

As per Rule 36 of the CGST Rules, 2017, the following documents are accepted for claiming ITC:

• Tax Invoice issued by a supplier under Section 31
• Debit Note issued by the supplier
• Bill of Entry or any similar document prescribed under the Customs Act for imported goods
• Invoice issued by Input Service Distributor (ISD)
• Invoice or Credit Note issued by a registered recipient in case of reverse charge transactions
• Circular No. 123/42/2019-GST:  This circular clarified that ITC could not be denied for minor discrepancies in documents, such as clerical errors in the address or HSN code, as long as the other core details (like GSTIN, invoice number, tax amount) are correct and the transaction’s authenticity is not in question.

2. Time Limit for Claiming ITC (Section 16(4))

Section 16(4) of the CGST Act, 2017 (as amended by Finance Act, 2022) prescribes a time limit for claiming ITC for any invoice or debit note. ITC cannot be claimed after the earlier of: a) The 30th of November of the following financial year. b) The date of filing the relevant annual return (GSTR-9). The original deadline was the due date of the September return, which was extended to November 30th.

• Case Law: M/s Gobinda Construction v. Union of India (Patna High Court), Civil Writ Jurisdiction Case No. 9108 of 2021: The Patna High Court upheld the constitutional validity of Section 16(4), stating that ITC is a concession or a benefit, not a vested right. Therefore, the legislature is within its rights to impose conditions, including time limits, for availing this concession.

Conclusion

To claim ITC legally and efficiently, businesses must:

• Maintain accurate and GST-compliant documentation
• Ensure suppliers have uploaded the invoices in GSTR-1 and paid the tax
• Reconcile purchase data with auto-generated GSTR-2B
• File returns (GSTR-3B) timely and accurately

Failure to comply with these provisions can result in disallowance or reversal of ITC, along with interest and penalties.

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Disclaimer: The information presented in this article is intended for general informational purposes only and should not be construed as legal, tax, accounting, or professional advice. While efforts have been made to ensure the accuracy of the content, the author and publisher assume no responsibility for any errors, omissions, or results obtained from the use of this information. Readers are encouraged to consult with qualified professionals to obtain advice tailored to their individual circumstances.