Eligibility Creteria and Conditions for taking Input Tax Credit (ITC)

Input Tax Credit (ITC) means the quantum of duty you paid on your purchase of input goods, service, capital goods, and duty paid under rear charge. also at the time of paying duty on your affair, you can reduce the duty you have formerly paid on your input and pay the balance quantum.

Section 16 of Central goods and service duty act (CGST) 2017 tells about the eligibility criteria and conditions for taking Input Tax Credit (ITC).

Eligibility Criteria:

Every registered person shall subdue to similar conditions and restrictions as specified and specified in section 49, be entitled to take Input Tax Credit (ITC) on any force of goods or services or both to him which are used or intended to be used in the course or headway of his business and the said quantum shall be credited to the electronic credit tally of similar person.

Condition to claim Input Tax Credit (ITC)

No registered person shall be entitled to the claim Input Tax Credit (ITC) in respect of any force of goods or services or both to him unless,-

He has entered the documents issued by the supplier similar as duty tab or disbenefit note or similar other duty paying documents as may be specified.

“And the details of the tab or disbenefit note has been furnished by the supplier in Return of his outside inventories and similar details have been communicated to the philanthropist of similar tab or disbenefit note in the manner specified under section 37 ” fitted(w.e.f. 1stJan. 2022 vide announcementNo. 39/ 2021-C.T., dt. 21st Dec. 2021)

Recipients must have entered goods or services or both.

Explanation to admit goods or service or both it shall be supposed that the listed person has entered the goods or, as the case may be, services-

(i) where the goods are delivered by the supplier to a philanthropist or any other person on the direction of similar listed person, whether acting as an agent or else, before or during goods movement, either by way of transfer of documents of title to goods or else;

(ii) where the services are handed by the supplier to any person on the direction of and on account of similar listed person.(w.e.f. 1st February, 2019)

(iii) The details of Input Tax Credit (ITC) in respect of the said force communicated to similar listed persons under section 38 has not been confined. fitted (w.e.f. 1st October, 2022 vide announcementNo.18/2022- CT dated 28.09.2022.) With the exception of the provision of section 41, the duty quantum charged in respect of inventories has formerly been paid to the government either in cash or through application of Input Tax Credit (ITC) permissible in respect of the said force and the supplier has filed the Return u/ s 39.

Proviso’s

“Provided that where the goods against an tab are entered in lots or inaugurations, the listed person shall be entitled to take credit upon damage of the last lot or investiture.”

“Provided that where a philanthropist fails to pay to the supplier of goods or services or both, other than the inventories on which duty is outstanding on rear charge base, the quantum towards the value of force along with duty outstanding thereon within a period of 180 Days from the date of issue of tab by the supplier, an quantum equal to the Input Tax Credit (ITC) profited by the philanthropist shall be added to his affair duty liability, along with interest thereon, in similar manner as may be specified.”

“Provided also that the philanthropist shall be entitled to mileage of the credit of input duty on payment made by him of the quantum towards the value of force of goods or services or both along with duty outstanding thereon.”

Depriciation on Tax Component- No ITC

Where the listed person has claimed depreciation on the duty element of the cost of capital goods and factory and ministry under the vittles of the Income duty Act, 1961, the Input Tax Credit (ITC) on the said duty element shall not be allowed.

Time Limit

A registered person shall not be entitled to take Input Tax Credit (ITC) in respect of any tab or disbenefit note for force of goods or services or both after the 30th November following the end of fiscal time to which similar tab or disbenefit note pertains or furnishing of the applicable periodic return, whichever is before.

Frequently Asked Questions

What's section 16 of CGST act 2017?

Section 16 of Central goods and service duty act( CGST) 2017 tells about the eligibility criteria and conditions for taking input duty credit( ITC)

What's Input Tax Credit( ITC)?

Input duty credit means the quantum of duty you paid on your purchase of input goods, service, capital goods, and duty paid under rear charge. also at the timing of paying duty on your affair, you can reduce the duty you have formerly paid on your input and pay the balance quantum.

What are the conditions of Section 16 of CGST act 2017?

He has entered the documents issued by the supplier similar as duty tab or disbenefit note or similar other duty paying documents as may be specified.
Donors must have entered goods or services or both.
With the exception of the provision of section 41, the duty quantum charged in respect of inventories has formerly been paid to the government either in cash or through application of Input Tax Credit (ITC) permissible in respect of the said force
The supplier has filed the Return u/ s 39.

Whether Depreciation can be charged on the Tax Component of Capital Goods?

Where the listed person has claimed depreciation on the duty element of the cost of capital goods and factory and ministry under the vittles of the Income duty Act, 1961, the Input Tax Credit( ITC) on the said duty element shall not be allowed.