Input tax credit in GST

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Eligibility of Input Tax Credit

  • All goods or services
  • Used or intended to be used
  • In the course or furtherance of business

Conditions to Claiming Input Tax Credit

  • Possession of a tax invoice, debit note, supplementary invoice or such other document which shows evidence of payment
  • Receipt of goods and/or services
  • The tax charged in respect of such supply has been actually paid
  • He has furnished the return under section 27
  • For goods received in lots or installments ITC will be allowed to be availed when the last lot or installment is received.
  • For goods received in lots or instalments ITC will be allowed to be availed when the last lot or instalment is received.

Credit for an invoice pertaining to a FY cannot be claimed after:

  • Filing of the return for the month of September following the end of FY or
  • Filing of the annual return of the FY; whichever is earlier (effectively 20th Oct)

Goods and Services on which Credit is not allowed

1. Motor vehicles, except when they are supplied in the usual course of business or are used for providing the following taxable services—

  • Transportation of passengers, or
  • Transportation of goods, or
  • Imparting training on motor driving skills
  • Such motor vehicle are further supplied.

2. Goods and / or Services provided in relation to food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as leave or home travel concession, when such goods and/or services are used primarily for personal use or consumption of any employee.

3. Goods and/or services acquired by the principal in the execution of works contract when such contract results in construction of immovable property, other than plant and machinery or it has been supplied for providing further supply of work contract services.

4. Goods acquired by a principal, the property in which is not transferred (whether as goods or in some other form) to any other person, which are used in the construction of immovable property, other than plant and machinery

5. Goods and/or services on which tax has been paid under section 8

6. Goods and/or services used for private or personal consumption, to the extent they are so consumed.

7. Goods or services or both received by a non-resident taxable person except for any of the goods imported by him.

8. Goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples

9. No ITC allowed if depreciation have been claimed on tax component of a capital good

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