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Introduction: With the surge in litigation surrounding the incorrect availment of Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime, it’s imperative for GST registered buyers to adhere to certain guidelines. This article outlines essential pointers that buyers must keep in mind while availing ITC to ensure compliance and mitigate the risk of disputes and penalties.

  • Possession of a tax invoice or debit note: Buyer must have possession of tax invoice and debit note. Further please note that tax invoice or debit note should have the valid field as specified in Rule 46 and Rule 53 of i.e Name, GST No, Place of supply, HSN, GST rate, invoice no not exceeding 16 digit and many more.  ITC of IGST paid on import of goods cab be claimed as ITC basis Bill of entry.
  • ITC should be available in GSTR 2B: Details has been furnished by supplier in GSTR 1 and same should be available in GSTR 2B of buyer.
  • Received of good and services: Buyer must have received the good and services. If the goods are received in instalments, ITC can be availed when last lots or instalment is received.
  • Payment of tax by supplier: Tax has been actually paid by supplier and GSTR 3B has also been furnished by supplier.

Input Tax Credit under GST - Important Points

  • Input tax credit should not be restricted u/s 38: ITC should not available basis various scenario as specified in section 38 of CGST Act i.e. continuous default in payment of tax by supplier, tax shown by supplier in GSTR 1 is more that tax paid in GSTR 3B etc. supplier has availed the excess ITC etc.
  • Payment to supplier within 180 days: Payment to 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 supplier is made. Further, please note that there is no-time limit for re-availment of ITC once payment is made to supplier.
  • Due date for Availment of ITC: Time limit to avail the ITC against invoice or debit note should be earlier of 30th November of next financial year or due date of filing the Annual return for that financial year. No ITC can be claimed beyond aforesaid dates.
  • Depreciation on GST portion: No ITC will be allowed if depreciation is claimed on GST component of capital good purchased.
  • Blocked credit: There are certain items that are not eligible for availment the ITC u/s 17(5) of CGST Act i.e. staff welfare expenses, rent a cab services, health insurance of employee, membership of health & fitness center, tax has been paid under composition scheme etc.

Conclusion: Effective management of Input Tax Credit (ITC) is paramount for GST compliance. By meticulously adhering to the outlined pointers regarding invoice validation, GSTR-2B reconciliation, receipt of goods, supplier tax payment, time limits, and blocked credits, GST registered buyers can navigate the complexities of ITC availing process, minimize the risk of litigation, and ensure seamless compliance with GST regulations.

For more details connect: CA Pooja Gupta, 7838968100,

Author Bio

Seasoned professional in Direct and Indirect taxation arena with 12 years of experience. Also working extensively with startups and advising them on business modelling, tax/regulatory compliances, tax assessments (GST & Income tax) etc.. She is having in-depth understanding and knowledge of prac View Full Profile

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One Comment

  1. S.Kannan says:

    All GST professionals please note that prior to 01.10.2022 under the CGST Act, the Legislatures policy has been prescribed that all the registered taxable persons are entitled to TAKE the ITC, ON CLAIM BAIS. But in this regards , the legislatures has changed their policy that he can entitled to AVAIL the ITC ON AVAILMENT BASIS, With effect from 01.10.2022.

    In this regards we shall consider the MISCHIEF RULE while interpretation.
    Availment basis means either from your books of account or data available and communicated to you.
    ITC is concession granted by Government. With effect from 29.01.2016 amended provision under TNVATAct; Rules and Form -I , the dealer who intend to claim ITC he shall upload his purchase Annexture Electronically, and he shall give a declaration in form I that the statement in form I is based on the Annexures ATTACHED.
    Legislatures same policy has been prescribed under the CGST Act.
    Being first step the registered person who intend to claim,he shall upload his purchase (& Service ) Invoice details that is called [ Rule 60(8)] DETAILS OF HIS INWARD SUPPLY, electronically prescribed in Section 38(2) . Like TNVAT the Statement in the Return shall based on the purchase register uploaded electronically, the same policy has been prescribed under CGST Act in Section 41 read with rule 61(2) of the CGST Rules 2017. Please note this conditions are applicable for the supply of goods or services or both made prior to 01.10.2022.
    Section 16(4) of the CGST Act restricted time limitation for such above activities.
    Till date the Government fails to bring to operation / denied opportunies to CLAIM ITC according to the Legislatures policy prescribed under Section 38(2) read with Section 41 of the ACt, for the supply of goods or services or both prior to 01.10.2022.
    Please note that Claim and Availment of ITC both are two different policy. please refer the mandatory provisions prescribed in Section 38(2) read with Section 41 of the CGST Act and rule 61(2) in Form GSTR-3 . please note the Validity of GSTR-1A; GSTR-2 and GSTR-3 till 30.09.2022 by virtue of Finance Act 6 of 2022 Notification CT No, 18 &19 of 2022.

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May 2024