Input Tax Credit Provisions under Section 16(2) CGST Act, 2017 From 01-10-2022 after considering amendments vide notification 18/2022 – Central Tax dated 28-09-2022.
The following conditions stipulated under section 16(2) CGST Act for entitlement of Input Tax Credit by the recipient or buyers are as under:
| S.No. | Section | Conditions | Effected Date of the Provision |
| 1 | 16(2)(a) | Tax Invoice or Debit Note or other notified tax paying document in possession of the Recipient | 01-07-2017 |
| 2 | 16(2)(aa) | Tax Invoice or Debit Note is appearing in GSTR-2B. | 01-01-2022 |
| 3 | 16(2)(b) | Goods or services or both for which Tax Invoice issued had been received by the Recipient | 01-01-2017 |
| 4 | 16(2)(ba) | Input Tax Credit has not been restricted. Such restrictions may be prescribed according to provisions stated under section 38 CGST | 01-10-2022 |
| 5 | 16(2)(c) | The tax charged in respect to the supply has been actually paid to the Government. | 01-07-2017 |
| 6 | 16(2)(d) | The recipient has furnished the return. |
01-07-2017 |
| Provisos to Section 16(2) in regard to reversal of the availed Input Tax Credit | |||
|
7 |
Input Tax Credit availed by the Recipient shall be reversed if the Recipient fails to pay to the supplier the amount towards supply of goods along with tax payable within the period of 180 days from the date of issue of the invoice. |
||
| Reversal of Input Tax Credit – Tax Payable not paid by the Supplier | |||
|
8 |
41(2) | The Input Tax Credit, whereon the tax payable has not been paid by the supplier, shall be reversed along with applicable interest in such manner as may be prescribed |
01-10-2022 |
As per provisions of section 38(2) notified vide notification 18/2022 – Central Tax dated 28-09-2022 effected from 01-10-2022 the auto generated statement (may be GSTR-2B) consisting of two parts shall be provided.
One Part shall state eligible Input Tax Credit which the Recipient can avail and utilize.
The Second Part shall provide details of such supplies in respect of which Input Tax Credit cannot be availed by the Recipient wholly or partly as may be prescribed.
To know the restricted ITC as per section 16(2)(ba) the recipient shall have to check the second part of the GSTR-2B.
Following suppliers may be prescribed for the purpose of section 38(2)(b) CGST.
- Supply by the newly Registered Person
- Supply by the registered person who has defaulted in payment of tax
- Supply by the registered person whose Output Tax Payable (as per GSTR-1) exceeding the output tax paid (as per GSTR-3B)
- Supply by the registered person who availed input tax credit in excess of eligible input tax appearing in GSTR-2B.
- Supply by the registered person who has defaulted in discharging his tax liability in accordance with the provisions of sub-section (12) of section 49. Provisions under section 49(12) are relating to minimum payment of output tax in cash even there is credit balance available in electronic credit ledger.
- By such class of persons as may be prescribed.
The aforesaid restrictions shall be applicable after prescribed by the legislature through the notification. Till date there is no such any restriction available which has been prescribed.
It is important to note and as per my opinion that the recipient shall have not to do any work on to locate the supplier whose supply shall not be eligible for the purpose of input tax credit as per section 38. Such details of supply shall be available to the recipient through auto generated statement in the form GSTR-2B.
The restrictions to be prescribed under section 38 shall be beneficial to the recipients. The recipient shall be got aware about the nature of supplier. The recipient shall be saved himself from such fraudulent supplier.
To reach to me for any suggestions, rectifications, amendments and/or further clarifications in regard of this article my email address is [email protected].
Author Bio
if turnover cross 20 lakh & purchase from unregistered dealer then what impact in GST
THANKS A LOT FOR THIS VALUABLE INFORMATION
Thank you sir for this piece of important information related to GST.