Input Tax Credit

Chapter V of CGST Act 2017

Section 16 to 21

16.Eligibility and conditions for taking input tax credit.

17.Apportionment of credit and blocked credits.
18.Availability of credit in special circumstances.
19.Takinginput tax credit in respect of inputs and capital
goods sent for job work.
20.Manner of distribution of credit by Input Service
Distributor.
21.Manner of recovery of credit distributed in excess.
 INWARD SUPPLY

means

receipt of goods and/or services by

purchase acquisition any other means

with/without consideration
 Sec 16 (1) - Eligibility for taking ITC
 Registration under GST
 Goods/Services used for business purposes

Sec 16 (2) - Conditions for availing ITC

 Possession of tax paying documents
 Receipt of Goods and/or Services (Bill to Ship to)
 Tax leviable on supply actually paid to Government
 Filing Return
 Rule - 36
 Input tax credit can be avoided by using following documents.

Rule - 36 (1)

Rule 36(1)

Invoice issued by
Invoice in case of Bill of Entry for Input service
Supplier of goods & Debit note
RCM IGST on Imports Distributor
services /or both
Rule - 36 (2)
Following details are sufficient to be present in invoice for
availability of ITC:

1) GSTN of supplier
2) GSTN of recipient
3) Description of supply
4) Value of supply
5) Amount of tax
6) Place of supply [applicable in case of interstate supply]
Rule - 36 (3)
 ITC cannot be availed in respect of any tax that has been paid,
where that has been confirmed on account of any fraud, wilful
misstatement or suppression of facts.

Rule - 36 (4)
 ITC can be availed by the registered person in respect of invoices
or debit notes.

 The details of which have not been uploaded by the suppliers shall
not exceed 10% of eligible credit available in respect of invoices or
debit notes the details which have been uploaded by the suppliers.
ITC on invoices/debit 100% ITC can be
notes which have been claimed on such
uploaded by the invoices/debit notes,
suppliers in their if all other conditions
GTSR-1s of availing ITC are
fulfilled

ITC on invoice/debit 10% of the eligible ITC

note which have not available on
been uploaded by invoices/debit notes
suppliers in their uploaded by suppliers
GTSR-1s in their GSTR-1s can
be claimed on such
invoices/debit notes.
 He has paid to the supplier the value of the supply and tax
thereon within 180 days of the date of issuance of invoice.
• If no such payment then the entire credit taken on such supply shall be
added to output tax liability along with interest thereon.
• He can take the credit again on making the payment for the value of
supply and tax thereon.

 No credit with respect to the amount of tax (if tax is capitalised )

on which depreciation is claimed.

 Credit of input tax can be taken till the last date of filing Annual
Return or actual date of filing annual return whichever is earlier.
To
Summarise:
Sec 17 (5) - ITC Blocked Credit
ITC shall not be available in respect of the following:

 Motor Vehicle and other conveyances

Except if used for:-
• Further Supply
• transport of passengers, transportation of goods,
• imparting training how to drive, navigate or fly them.
 Supply of following goods or services or both
• Food Beverages, beauty treatment, cosmetic surgery, health services,
outdoor catering
• Membership of club/health and fitness centre
• Travel benefit to employees
• Rent a cab, life insurance and health insurance (unless govt. makes it
ITC Blocked Credit

 Works contract services for construction of immovable

property other than plant and machinery.
 Supply where tax is levied under composition scheme
 Supplies used for personal consumption
 Goods lost/ stolen/ destroyed/ written off or disposed of
by way of gift/f ree sample
 Any tax paid after issuance of SCN with respect to such
SCN, detention or confiscation
Availability of ITC in Special Cases

 If registered person ceases pay tax under composition

scheme or his exempt supply becomes taxable supply-

 he can take credit tax paid on such inputs held in stock on

the day immediately preceding the date from which he
becomes liable to pay tax.

 He can take credit of tax paid on capital goods exclusively

used for such good or services
• Provided that credit shall be reduced such percentage point
prescribed in rules.
Availability of ITC in Special Cases

 lf capital goods are supplied on which credit was taken-

person shall pay an amount equal to such credit reduced by
percentage points or transaction vale of such supply
whichever is higher.

 Person has the option in case of supply of refractory bricks,

mould and dies, jigs and fixtures
A. Apportionment of Credit [ Sec 17 (1) & Sec 17 (2) ]
Sec 17(1)

Sec 17(1)
B. Special provisions for banking companies
and NBFCs [ Sec 17 (4) ]
 Remaining 50% ITC will
lapse

 Restriction of 50% shall

not apply to the tax
paid on supplies
received from another
registration within the
same entity.

 Option once exercised

cannot be withdrawn
during remaining part
of the year.
C. Apportionment of Common Credit in
case of input and input services [ Rule 42 ]
T

Total IT on I + IS

T1 T2 T3 C1

IT on I+IS used Remaining ITC

IT on I+IS used
exclusively for Blocked credits credited to ECrL
exclusively for
non-business u/s 17(5) = T- (T1 + T2 + T3)
exempt supplies
purposes

C2 T4
 C2 T4

Common credit Credit attributable to I + IS

= C1 – T4 used exclusively in taxable
supplies including ZRS

D1 D2 C3

Credit attributable to exempt supplies- Credit attributable to non-business Remaining

purpose if common common credit
D1 = x C2 I + IS used partly for
business + non - business purposes = C2 – (D1 + D2)
E = Value of ES during tax period
F = Total turnover in the State during tax D2 = 5% x C2
period
If no turnover during the tax period/values
not available, values for last period may be Eligible ITC
used. attributable to
business & taxable
supplies including
ZRS
Ineligible ITC

Total eligible ITC

To be reversed = T4 + C3
D. Apportionment of Common Credit on
Capital Goods [ Rule 42 ]
Total input tax (IT) on capital goods (CG)

(a) (b) (c)

IT on CG used exclusively fornon- IT on CG usedexclusively IT on CG not covered under (a) & (b)
business/exempt supplies for taxable supplies denoted as ‘A’ and useful life of suchCG
including zero rated supply  5 years from date of invoice
(ZRS)

Credited to E C rL
Credited to ECrL

Tc
 Tc

Common credit on CG  Tc =  (A of common CG

Tm
Common credit of CG for a taxperiod
during their useful life
whose useful life remains during the tax period)
 If CG under (a) subsequently gets covered under (c),
then ‘A’ = IT on CG under (a), and ‘A’ to be credited to
ECrL. Tie = 5% of ‘A’ for every quarter or part thereof
when CG was under (a) and Tie to be added to output
tax liability of the tax period when ‘A’ is claimed.
 If CG under (b) subsequently gets covered under (c),
then IT claimed on CG under (b) to be added to Tc

Tm = Tc /60

Te

Common credit towards exempted supplies

Te = x Tr

E  Aggregate value of exempt supplies during the tax

period; F  Total turnover in State during the tax period. If
no turnover during the tax period/valuesnot available,
values for last tax period may be used.