A Guide to ITC under GST

According to Section 2(62) of CGST Act, Input tax credit means “Central Tax (CGST), State tax, Integrated Tax (IGST), union tax (UTGST) charged on supply of goods or services or both and includes

(i) IGST charged on import of goods
(ii) Tax payable on Section 9(3) and 9(4) under CGST (reverse charge of CGST)
(iii) Tax payable on Section 5(3) and 5(4) under IGST (reverse charge of IGST)
(iv) Tax payable on Section 9(3) and 9(4) under respective SGST (reverse charge of IGST)
(v) Tax payable on Section 7(3) and 7(4) under UTGST (reverse charge of CGST)

However, does exclude charge paid under organization demand.

FLOW OF INPUT TAX CREDIT

The balance of GST will be set off against

• Input tax against Output tax
• IGST against IGST, CGST and SGST
• CGST against CGST and balance of IGST (if any)
• SGST against SGST and balance of IGST (if any)

PROCESS OF CLAIMING IGST

Each enlisted available individual will expose to the conditions recommended in Section 49 of the CGST Act, be qualified for guarantee input tax reduction charged on any inventory of labor and products or both to him which are to be utilized or planned to be utilized over the span of his business and the said sum will be credited to the electronic credit ledger of such person as under section 16(1) of CGST Act.

Electronic Credit Ledger is the info tax break record in the electronic structure kept up with at the normal portal for each registered taxable person. The credit can be utilised for GST liability in section 49(4) of CGST.

DOCUMENTS REQUIRED FOR CLAIMING INPUT TAX CREDIT

The input tax credit shall be availed by a registered person, including Input Service Distributor, on the basis of the documents mentioned under Rule 36 of CGST and SGST Rules, 2017 which includes

(i) An invoice issued by supplier of goods or services or both under the provision of section 31

(ii) An invoice issued in accordance with the provision of section 31 (3) (f) subject to the payment of tax

(iii) A debit note issued by a supplier in accordance with section 31 of the act

(iv) A bill of entry or similar documents prescribed under customs Act or Rules for assessment of IGST

(v) An invoice or credit note issued by input service Distribution in accordance with the provisions of rule 54(1) of CGST Rules, 2017.

Input Tax Credit in case details not furnished by supplier Info tax break to be profited by an enrolled individual in regard of solicitations or charge noticed, the subtleties of which have not been transferred outfitted by the providers under sub-segment (1) of area 37 in FORM GSTR 1 or utilizing the receipt outfitting office, will not surpass 20% 10% 5 percent of the qualified credit accessible in regard of solicitations or charge takes note of the subtleties of which have or using the invoice furnishing facility.

REQUIREMENTS FOR AVAILING INPUT TAX CREDIT

According to Section 16(2) of CGST Act, a registered taxable person shall

(i) In the possession of invoice or debit note issued by the supplier registered under GST Act or any such other documents as may be prescribed

(ii) He has gotten the labor and products or both

(iii) Subject to 41 of CGST Act, the expense charged in regard of such stock has really paid to the credit of the fitting government either in real money or through usage of information tax break admissible in respect of said supply

(iv) He has furnished returns under section 39 of the act

(v) Where the registered person has claimed depreciation on the tax component of the cost of capital merchandise and plant and hardware under the arrangements of the Income-charge Act, 1961, the information tax break on the said charge part will not be permitted.

BURDEN OF PROOF AVAILING TAX CREDIT

According to section 155 of CGST Act, when any person claims that he is eligible to claim input tax credit under this Act, the burden of proof shall lies on such person.

REVERSAL OF INPUT TAX CREDIT IF PAYMENT IS NOT WITHIN 180 DAYS

Where a buyer fails to pay to the supplier of goods or services or both within a period of 180 days from the date of issue of receipt, a sum equivalent to the information tax break will benefited by the recipient shall be added to his output tax liability along with the interest as per provision of section 16(2) of CGST Act. In the event that halfway installment is made, the inversion will be proportionate to the sum not paid to the supplier. If the payment to supplier is late, he can take credit of input tax as according to section 16(2) of CGST Act.

Authored by CA Madhuri Marne