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GST – Unsolved critical issues relating to Input tax credit

Basic Provision – Conditions for taking credit?

Requirements of section 16

  • Usage: Credit for only those goods services which are to be used or intended to be used for business
  • Documents: Credit of input tax allowed only if invoice or debit note or other documents are in possession
  • Receipt: ITC is available on receipt of services or goods (last installment/lot)
  • Tax payment: Supplier has paid tax to Government
  • Return: Return under section 39 is filed by the recipient
  • Payment to the supplier: Payment to the supplier of goods services is made within 180 days
  • Time Limit for availing credit: Credit not available after filing of September Return or Annual Return whichever is earlier

Related Topic:
Eligibility of Input Tax Credit on Lifts/Elevators

What is business?

Section 2(17) of the CGST Act

“business” includes––

(a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit;

(b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a);

(c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction;

(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;

(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;

Related Topic:
Updated Provisions of Input Tax Credit under GST

Documentary requirements and conditions

Rule 36 of CGST Rules, 2017

As per rule 36(1), ITC shall be availed by the Registered Person, including ISD, on the basis of any of the following documents, namely:

  • Invoice issued by the supplier as per Section 31
  • Invoice issued by in accordance of Section 31(1) (f), subject to payment of tax
  • Debit Note issued by the supplier as in accordance with Section 34
  • Bill of Entry or any similar document
  • ISD invoice or ISD credit note in accordance of Rule 54(1)

Related Topic:
Input Tax Credit on Medical Insurance

Details to be mentioned in Invoice

Minimum Information in an invoice for availing ITC (Rule 36)

1. Details of the amount of tax charged,

2. Description of goods or services,

3. Total value of supply of goods or services or both,

4. GSTIN of the supplier and recipient

5. Place of supply in case of inter-State supply

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GST - Unsolved critical issues relating to Input tax credit

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