- ITC (Input Tax Credit) – SECTION 16
‘Input Tax Credit’ or ‘ITC’ means the Goods and Services Tax (GST) paid by a taxable person on any purchase of goods and/or services that are used or will be used for business. ITC value can be reduced from the GST payable on the sales by the taxable person only after fulfilling some conditions. It is to be confirmed ITC figures before filing GST return for any period with your Chartered Accountant. It should be noted that ITC for any concerned month can be claimed earlier of –
- Date of filing annual return for the relevant period or
- 30th November of the next financial year,
– Then after ITC will be lapsed.
Conditions under which ITC (input tax credit) can be claimed under section 16:
| 1. | Business Purpose – In course or Furtherance of Business |
| 2. | Tax Invoice / Debit Note / Any Other Document evidencing payment towards Purchase |
| 3. | Must be filed in GSTR 1 of Supplier and Must be reflected in GSTR 2B of Buyer |
| 4. | Must have received Goods or Services |
| 5. | Buyer must furnish GSTR-3B |
| 6. | Buyer must pay amount to supplier within 180 days |
| 7. | In case of Capital Assets, if Depreciation is claimed then ITC can be claimed on Taxable Value |
However in case of non-reflection of ITC in GSTR 2B of Buyer between 01/10/2019 to 31/12/2021 some remedies are available on provisional credits as per following notifications.
| Sr. No. | Notification No. | % on ITC appearing in GSTR-2A | Effective from (Date) | Effective up to (Date) |
| 1 | No Clarification | No Limit (On Suppliers’ Certificate) | 01/07/2017 | 30/09/2019 |
| 2 | 49/2019 Dated 09/10/2019 | 20% | 01/10/2019 | 31/12/2019 |
| 3 | 75/2019 Dated 26/12/2019 | 10% | 01/01/2020 | 31/12/2020 |
| 4 | 94/2020 Dated 22/12/2020 | 5% | 01/01/2021 | 31/12/2021 |
| 5 | Finance Act, 2021 | Provisional Credits is not available from | w.e.f. 01/01/2022 |
