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"Input Tax" in relation to a taxable person means the Goods and Services Tax charged on any supply of goods and/or services to him which are used or are intended to be used, during furtherance of his business. ITC being the backbone of GST and a major matter of concern for the registered persons, conditions for eligibility to ITC and eligible ITC have been prescribed which is more or less in line with pre- GST regime. These rules are also quite particular and stringent in its approach.

Conditions for claiming Input Tax Credit under GST

A registered person will be eligible to claim Input Tax Credit (ITC) on the fulfillment of the following conditions:

1. Possession of a tax invoice or debit note or document evidencing payment

2. Receipt of goods and/or services

3. Goods delivered by supplier to other person on the direction of a registered person against a document of transfer of title of goods

4. Furnishing of a return

5. Where goods are received in lots or installments ITC will be allowed to be availed when the last lot or installment is received.

6. Failure of the supplier towards supply of goods and/or services within 180 days from the date of invoice, ITC already claimed by recipient will be added to output tax liability and interest to paid on such tax involved. On payment to supplier, ITC will be again allowed to be claimed

7. No ITC will be allowed if depreciation has been claimed on tax component of a capital good

8. Time limit to claim ITC against an Invoice or Debit Note is earlier of below dates:

  • The due date of filing GST Return for September of next Financial year or
    Date of filing the Annual Returns relevant for that Financial year

For instance, ABC Corp, a buyer has a Purchase Invoice was dated 8th July 2017( FY 2017-18), wants to claim GST paid on that purchase. As per the criteria laid down to reckon the time limit:

The Due date of filing GST return for September 2018( FY 2018-19) is 20th October 2018 and the Date of filing GST Annual Return for FY 2017-18 is 31st December 2018, whichever is earlier will be the time period within which ABC Corp has to claim ITC. Therefore, the date is 20th October 2018 and ABC Corp can claim this ITC in any of the months between July 2017 to September 2018.

9. Common credit  of ITC is used commonly for:

  • Effecting exempt and taxable supplies
  • Business and non-business activity

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