How to Claim Input Tax Credit (ITC) under GST – Conditions and restrictions on claiming ITC as per GST rules

1.0 Introduction 

Info assess credit (ITC) is said to be the spirit of GST. GST depends on one of the principle issues of the present tax collection framework, i.e. falling impact. Thus, it is up and coming that this article is vital under GST administration. 

Before going ahead, we should comprehend the couple of fundamental definitions which were there in the past laws also; in any case they are characterized distinctively under GST administration. 

Info: Input implies any products other than capital merchandise utilized or expected to be utilized by the provider in the course or assistance of business; [clause (59) of segment 2]. 

Info Service: Input benefit implies any administration utilized or planned to be utilized by a provider in the course or facilitation of business; [clause (60) of area 2]. 

Capital Goods: Capital Goods implies products, the estimation of which is promoted in the books of records of the individual guaranteeing the credit and which are utilized or proposed to be utilized as a part of the course or assistance of business; [clause (19) of area 2]. 

Imperative point: The meaning of capital merchandise has been improved a ton. Prior, the definition was exceptionally equivocal and subject to suit with respect to what is capital great and what isn't. 

2.0 Eligibility to assert the ITC under GST rules 

Each enrolled assessable individual might be qualified for assume praise of information impose charged on any supply of products or administrations to him which are utilized or planned to be utilized as a part of the course or advancement of his business and the said sum should be credited to the electronic credit record of such individual. 

In straightforward words, the credit of ITC can be asserted if the merchandise or administrations got are utilized or planned to be utilized as a part obviously or assistance of his business. 

Nonetheless, the guaranteeing the ITC isn't as simple as it peruses. There are numerous limitations and conditions to assert ITC under GST. Henceforth, let us advance and under those conditions. 

3.0 Conditions to guarantee ITC under GST rules 

The enlisted assessable individual might be qualified for the credit of any information charge in regard of any supply of merchandise as well as administrations subject to the accompanying conditions; 

#Condition no.1 – Valid Tax receipt or charge note or some other legitimate report 

To assert credit under GST, an enlisted assessable individual ought to be in control of a duty receipt or charge note issued by a provider or such other taxpaying record as might be told by the legislature. 

ITC in the event that where merchandise are to be gotten in parcels? 

Where the merchandise against a receipt are gotten in parcels or portions, the enlisted assessable individual should be qualified for assume endless supply of the last part or portion. 

#Condition no.2 - He has gotten the merchandise as well as administrations 

This has been done to stop the act of issuing ill-conceived solicitations just to assert the ITC and decrease the assessment obligation. Along these lines, from now onwards, on the off chance that you have gotten the merchandise or administrations, at that point just you are qualified to guarantee the ITC under GST. 

Vital point: It might be regarded that the assessable individual has gotten the products where the merchandise are conveyed by the provider to a beneficiary or some other individual on the bearing of such assessable individual, in the case of going about as an operator or something else, earlier or amid development of products, either by method for exchange of reports of title to products or otherwise]. 

#Condition no.3 – Tax ought to be paid to the legislature - Important 

This is one of the conditions which might have a sweeping effect once GST is advised. It is for all intents and purposes exceptionally hard to check whether the assessment has been paid by the provider or not. The proviso expresses that the duty charged in regard of such supply has been really paid to the record of the suitable Government, either in real money or through usage of information assess credit acceptable in regard of the said supply. 

The Supreme Court Judgment invalidated by this point 

According to Supreme Court, if there should arise an occurrence of Commissioner of Central Excise, Jalandhar Vs M/s. Kay Industries (SC), Cenvat credit can't be denied on negligible delinquency by the provider. Preeminent states that where every one of the conditions as set down under cenvat credit rules has been gone along, at that point there is no motivation behind why cenvat credit could be denied to the assessee. Be that as it may, now, this rule has been overruled by the administration by presenting this point. 

Subsequently, under GST administration, no credit can be profited unless the provider has really paid to the record of the proper Government, either in real money or through usage of information charge credit permissible in regard of the said supply. 

#Condition no.4 – If no installment is made to provider inside 180 days 

In the event that no installment is made to provider for merchandise or administrations got alongside impose inside 180 days from the date of receipt, at that point the enrolled citizen should be obligated to pay a sum equivalent to the information assess credit benefited by the beneficiary might be added to his yield charge risk, alongside intrigue. 

#Condition no.5 – No ITC if Depreciation asserted 

Where the enlisted assessable individual has asserted devaluation on the duty part of the cost of capital products under the arrangements of the Income Tax Act, 1961(43 of 1961), the information impose credit might not be permitted on the said charge segment. 

#Condition no.6 – No ITC if item is exempted under GST 

In the event that you are managing in exempted merchandise or products conveying nil rate of expense, at that point ITC in regard of those products should not be accessible. 

#Condition no.7 – No ITC if Composition advantage is asserted 

In the event that you are a merchant who has selected to assess under Composition Scheme, the ITC in regard of products held in stock might not be accessible. 

4.0 Non accessibility of Input Tax Credit (ITC) under GST rules 

There are right around 12 situations where ITC of information assess isn't permitted to be asserted. Henceforth, you should take in these 12 cases with a specific end goal to pay charge under GST accurately. 

Read: 12 Cases where ITC on input isn't accessible under GST