Section 16 of GST – Eligibility and conditions for taking input tax credit

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Section 16 of GST Act 2017 – Eligibility and conditions for taking input tax credit. Check out details for GST Section 16 as per CGST Act 2017. Complete Analysis of GST Section 16, Section 16 of GST provide details for Eligibility and conditions for taking input tax credit. Explanation of Goods and Service Tax all Sections. Check Section Wise Analysis of GST Act 2017, Chapter Wise Analysis of GST All Sections. in this article you may find complete details regarding Section 16 of CGST Act 2017 – Eligibility and conditions for taking input tax credit, gst all section and definitionsNow Check more details from below…..

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Section 16 of GST – Eligibility and conditions for taking input tax credit

(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, –

  • (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
  • (b) he has received the goods or services or both

Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;

  • (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and
  • (d) he has furnished the return under section 39:

Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment:

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.

(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income Tax Act, 1961, the input tax credit on the said tax component shall not be allowed.

(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Introduction

Chapter V of CGST Act deals with input tax credit. The availment or otherwise of Input Tax Credit forms the cornerstone in a GST regime. GST can be understood as a system of value-added tax on goods and / or services. It is these provisions of Input Tax Credit that make GST a value-added tax i.e., collection of tax at all points in the supply chain after allowing for credit of taxes paid on inputs / input services and capital goods. The invoice method of value added taxation has been followed in the GST regime too, viz., the tax paid at the time of receipt of goods or services or both would be eligible for set-off against the tax payable on supply of goods or services or both, based on the invoices with a special emphasis on actual payment of tax by the supplier. As on date, there is a debate going on between the tax payer and the Government as to whether the emphasis placed by the Statute on payment of taxes by the Supplier to enable a Recipient to avail credit, is fair or not and whether it adds on to the compliance burden or not. The procedures and restrictions laid down in these provisions are important to make sure that there is seamless flow of credit in the whole scheme of taxation without any misuse.

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24 Comments
  1. Gangadhar Khandelwal says

    If anyone purchase a material with GST input and not paying for more than 180 days then he cannot claim input tax. Moreover he will need to pay additional interest also to government for the 180 days of enjoying input tax.
    Is it correct?

    1. ANAND KUMAR says

      Hello Sir,
      No actually this provision is made by Gov to CONTROL “BOGUS INVOICE” . Actually what is happens that the Recipient ,on the basis of INVOICE issued by supplier booked his own Input Tax Credit (ITC), even without payment of such tax amount.

      But if the Recipient paid the amount , lets suppose Value of Good supplied by Supplier to Recipient was Rs 100000 +GST tax Rs 40000 = Rs 140000 , he paid 40% of such tax amount i.e Rs 16000 on 190 days(after 180days +10 days) & balance amount Rs 24000 on 250 days ,he Can RE-AVAIL its ITC & book accordingly on proportionate basis.
      The Interest , if he did not or say hide such tax amount from the Gov, On NON PAYMENT of such tax amount , his output Liability will be increased by such equal amount (my ex say Rs 40000) &also event will be communicated to the GOV in Relevant GSTR-2 (upcoming GSTR -2 after 180 days ).
      Interest payable will be calculated from the date of booking of ITC by Recipient till the date of payment of his Output Liability.

      Hope Sir , u will understand .
      Thanks

  2. ramanujam s t g s says

    receiving the goods means just receiving the material(MIGO) in SAP or after acceptance of the material AND iNVOIVE vERIFICATION(MIRO) in SAP

  3. Neha Agrawal says

    Closing itc under vat act as on 30/06/2017 will be treated as sgst/cgst/igst

    1. shanu says

      sgst

  4. Arun Gautam says

    is any taxpayer claimed itc GST paid of Expenses like courier, hotel stationery etc

  5. Chetan says

    Hi, we are manufacturers of ready-made garments and supply to various stores. My query is will I get ITC on garments supplied. For example. My input tax is Rs. 25 which is paid against trims, washing, jobwork etc. And I charge 5% rate to stores being less then 1000/- which amts to Rs. 15/- being my selling price of Rs. 300/-, so will I get ITC of Rs. 10/-. Kindly advice on the same.

    1. S Raghavan says

      Yes. U r eligible for ITC

  6. raju says

    a textile job asesse how can benefit for 30th June stock vat paid when he was not regsted dealer on that time… ex. 240000 stock as unregistered dealer itc 12000 n now register ist July….

  7. magicomeal says

    HI , we are into the catering business. we provide catering services to corporate & schools.and
    school is exempted from GST my query is that If my Total corporate sales is 5lac + my school sales is 5lac , & we used purchased material 60 & 40 %

    so how much we should claim input tax ??

    we charge gst rate is 18% on corporate sales

  8. rainbow says

    I am paying rent of Rs.12000/- per month. what are the GST formalities for me. I am a registerd dealer. my land lord is not registered in gst.

  9. n.k.joshi says

    my materiel dispatch dat. 18.7.2017 bomaby to bihar but not received materal 20.9.2017
    what we are claim to input igst. for the month of july.
    kindly ans, my qt.

  10. Devendra Kumar says

    Hi,
    We are a small manufacturer, we received goods for job work before gst implication and we had taken cenvat credit on such goods, now the material is ready to be dispatched, but the principal is advising to don’t charge GST on such goods. Pl. Suggest whether we have to charge gst or not.

  11. R SREENIVAS says

    Hi,
    I am GST registered . If I buy apartment for guest house for my employees, can I take in out credit for the GST paid in the invoice.

    The property is being used for business purposes and employees convenience.

  12. Krishna Patel says

    Hello,
    Can anyone please explain this provision of Section 16(3) of CGST Act that says Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed. EXAMPLE will help better.

  13. Jyoti says

    Under section 16(2) of CGST Act how many conditions are to be fulfilled for the entitlement of credit

  14. Jyoti says

    What is the time of supply of vouchers when the supply with respect to the voucher is identifiable?

  15. SIBA PRASAD DAS says

    If there is no movement of goods(Refer u/s 10 (1)(c)) for Tools & jigs used for manufacturing of final product of customer, how the customer avail input credit on those tools & Jigs.

  16. Samir Prasad says

    Sir we are IT service providers and our clients are based out of US. We raised a invoice, next what we have to do? File GST return and pay the tax anount to govt or we comes under zero tax rate slab. We received the amount into our account after converting the USD into Rs.

  17. Nitin sharma says

    sir, i am furniture manufacturer and i sell furniture frame then what is the HSN code and the gst rate upon this. in the month of October i take invoice of machine. the tax upon purchases that can be eligible ITC for me. and which purchases can i take ITC. I have also purchased some computers parts on invoice. is it eligible ITC for me.
    hope so u understand what i m saying

  18. Rohit Gupta says

    If the head office has supplied goods on 30 oct nd received by branch on 4 nov. Then at which point ITC will be booked??.. 30 oct or 4 nov?

  19. Sachin Agrawal says

    Sir,
    Oil Marketing companies are taking license fees from Petrol pump dealers against their supply of Petrol / Diesels with GST tax. Also they are generating gst invoice monthly under Right to use of GST head . Whether we the Pump owner can take that GST amount as Input tax credit claim. Kindly clarify .

  20. PINAKIN BHAVSAR says

    what is the time line for ITC reversal and re-claim, if supplier payment is not made within the 180 days.

  21. Vivek says

    I am an Architect, I purchased commercial flat in commercial complex for office use only. Whether GST input is available for me??

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