CS Professional Important topic of GST INPUT TAX CREDIT (ITC)
Input tax credit is the type ofcredit that manufacturers received for paying input taxes towards goods used in the manufacture of products. Similarly, a dealer is entitled to input tax credit if he has purchased goods for resale purpose.
ELIGIBILITY AND CONDITION FOR TAKING INPUT TAX CREDIT
- Only the registered person can take the credit for input, on such condition that input tax credit on the supply of goods or services are intended to be used in course and furtherance of business and the amount will be credited to the electronic ledger of such person
- CONDITION FOR CLAIMING INPUT TAX CREDITED
- Have possession of a tax invoice or debit note issued by supplier registered under this act.
- Has received the goods or service or both.
- The tax which is charged of such apply should actually be paid to the government, either in cash or through utilization of input tax credit
- Has furnished the return under section 39
- LIST OF DOCUMENT THAT WILL BE REQUIRED IN CLAIMING INPUT TAX CREDIT
The following document should be there to claim input tax credit by registered person:-
- An invoice issued by the supplier of goods or services or both in accordance with the act
- An invoice issued in accordance with sec 31 that is under reverse charge
- A debit note issued by the supplier
- A bill of entry as per custom act,1962
- An input service distributor invoice input service distributor credit note
- Input tax credit can only be claimed if the applicant submits the required application along with required documents in form no. GSTR-2.
- If there is a demand which is confirmed as a fraud, willful misstatement then the applicant will not be allowed input tax credit on any extent
- If the goods received against any order received in allotment then the input tax credit will receive inthe allotment.
- Reversal of input tax credit should be done if payment for the invoice is not done within 180 days of issuance of invoice
- In case if payment is done after 180 days, the recipient shall be entitled to avail the credit of input tax on payment made by him towards the value of goods and services
- If the registered person has claimed depreciation on the tax component of capital goods then no input tax credit will be allowed to the applicant
- There is a specific time limit for availing input tax credit, after passing that date credit will not be allowed. If the person has to claim input tax credit on debit note or supply of goods or service before the furnishing of return under section 39 for the month of September following the end of financial year to which such invoice relates or furnishing of annual return, whichever is earlier
Let take an example to understand this:-
Date of invoice for the supply of such goods: – 10.04.2018
Date of furnishing return in the month of September: – 20.10.2019
ANNUAL RETURN FOR 2018-2019: – 28.10.2019
In this case, the time limit for availing input tax credit will be 20.10.2019
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