Input tax credit availability in revised GST Law

GST was introduced in India as a resource for free flow of credit in India. Input tax credit availability in revised Model GST draft law is somehow more restricted then the earlier draft. In this article we will discuss the availability of ITC and what we need to do to avail it.For restriction of input tax credit availability we already have an article (Click to read). First of all let us know what kind of taxes we need to pay in GST. There will be three taxes namely CGST,SGST and IGST. Flow of credit will be available in following manner.

Input tax Credit of IGST will available in following sequence: 

First With IGST

Then if any amount left with CGST 

then if any amount left with SGST (of any state)

Input tax Credit of CGST will be available in following sequence:

First with CGST

Then if any amount left with SGST (of any state)

Input tax credit of SGST will be available in following sequence:

First with SGST (of same state, no SGST will be available for SGST of any other state)

Then if any amount left with IGST.

Input tax credit availability of CGST and SGST will not be cross utilised ever.

How to claim my Input tax credit:

There will be very simple process to claim the input tax credit. Supplier will file his return in GSTR-1 in which he will fill the details of all supplies made by him during the previous month to which such return pertains. Then that data will be auto-populated to the recipient in GSTR2A where he can add , delete or modify the data entered by the supplier. Input tax credit in respect of the data matching with the date of supplier where the credit provided by supplier and claimed by the recipient are same will be available to supplier.

Apart from that the data modified or the invoices entered by the recipient will be provisionally accepted. Recipient will be able to pay the tax based on that provisional matching and file his return. Then in the backend data will be reconciled with the data of supplier and a mismatch report in form ITC-1 will be make available to both supplier and recipient. They need to remove the discrepancies by month end. Mismatches not so rectified or make good by the recipient will be added to the out put tax liability of the recipient. Recipient will have to pay that amount of tax plus interest but even if in future he reconcile the data the amount of tax and interest paid by him will be refunded.