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sanjeev (Querist)

20 December 2018 We purchased a material delivered 100% item .As per terms of PO 70% payment to be made on receipt of materal and balance 30% in subsequently 3 years. Wether we can claim Full ITC in First year on receipt.Supplier has raised 100% value of GST invoice

CA ANUBHAV

CA ANUBHAV (Expert)

20 December 2018 As per legal provisions applicable till date there is a provision that ITC will be allowed if payment of goods along with eligible taxes have been paid within 180days else ITC claimed need to be reversed along with interest. In this case GST cannot be claimed for full amount as per my opinion.

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ACA Sarita Laddha

ACA Sarita Laddha (Expert)

21 December 2018 According to Second & Third proviso to Sec. 16(2) of the Central Goods & Services Tax (“CGST”) Act, 2017 :

“Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed :

Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.”

Hence in your case, 100% ITC can not be claimed in first year as 30% will be paid in subsequent 3 years. In first year only 70% will be allowed as claim and remaining will be allowed on payment.
However, if full invoice will be raised in 1st year, ITC for 30% for which payment will be released in subsequent years, cannot be availed because of the time limit prescribed in sec 16(4).
Again, Rule 37(4) provides that the time limit prescribed u/s 16(4) for availing ITC (i.e. before the due date for furnishing return for the month of September of the succeeding year or annual return, whichever is earlier) shall not apply for reavailing the credit which was reversed earlier. Hence reavailment can be claimed anytime in future when the payment is made.

In my opinion, 1st claim 100% input and then reverse in the same month for 30%. Claim Input for 30% when the payment will me made.

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