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In the Current Tax Regime, Various conditions are applicable for availing input tax credit. A brief overview is given below:-

VAT: As a VAT dealer, you can avail credit of VAT paid on goods purchase in course of business, for re-sale or for manufacture of goods, subject to some conditions. Only purchase made from registered taxable dealer are eligible for input tax credit.

Service Tax: As a manufacturer, you can avail CENVAT credit on all inputs used directly or indirectly in relation to the manufacture of final products. You can also avail ITC on the service tax paid on any input service. If you are a service provider providing taxable service, you can avail ITC on the service tax paid on input services used for provision of the taxable services.

Under GST regime, input tax credit can be availed by every registered person on all inputs used or intended to be used ion course or furtherance of business. But, for claiming ITC under GST certain conditions need to be satisfied which are as under:-

  • You should have Tax invoice/Debit note/Credit note issued by registered taxable person.
  • The goods/services should have been received.
  • GSTR-3 should be filed for the related month
  • Tax charged should be paid to government by supplier.

Scenarios when input tax credit can be availed under GST

  • When person apply for registration under GST.
  • When dealer leaves composition scheme and become a regular dealer.
  • When exempted goods or services becomes taxable.
  • When there is reconstitution of business (Amalgamation/sale/demerger/lease).
  • When goods or services are partly used for business and partly for other purpose.
  • When goods or services are partly used for taxable supplies and partly for exempt supplies.

Scenarios when ITC under GST is not available:

  • Registration not applied within 30 days from date on which person is liable for registration.
  • After time limit for availment of ITC is crossed
  • On goods or services used by composition dealer.
  • On goods or services used for personal consumption.
  • On goods or services used for making exempt supplies.
  • On services which were received and payment for which is not made within 3 months.
  • On goods which are lost, damaged, destroyed or disposed off as gift or free samples.
  • On motor Vehicles or other conveyance
  • On travel benefits to employees on vacation.

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Category GST, Other Articles by - CA Shubhanshu Jain