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Input tax credit is the credit that a manufacturer has received for having paid input taxes towards the inputs that have been used in the manufacture of goods and products. In a similar manner, a dealer will be entitled to input tax credit.
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| Government Fee | Rs 0 |
| Professional Fees | Rs 1,459 |
| Goods & Service Tax | Rs 00 |
| Total Cost | Rs 1459 |
(All you need to know)
Input tax credit is the credit manufacturer’s received for paying input taxes towards inputs used in the manufacture of products. Similarly, a dealer is entitled to input tax credit if he has purchased goods for resale.
All dealers are liable for output tax on taxable sales done in the process of his business. With the help of input tax credit, he can offset the output tax against the input tax already paid. Input tax credit is not applicable on all types of inputs. Each state has its own norms and conditions in this regard and are applicable accordingly.
1. Must possess a Tax Invoice / Debit or Credit Note / Supplementary Invoice issued by the supplier
2. Must have received the goods/services
3. Must have filed returns
4. Must ensure that the tax charged has been paid to the government by the supplier
5. Must have completed invoice matching and would have arrived at the final ITC post reversals.
To avail input tax credit benefits, the goods purchased should be for one of the below mentioned purposes:
ITC can be availed only on goods and services for business purposes. If they are used for non-business (personal) purposes, or for making exempt supplies ITC cannot be claimed . Apart from these, there are certain other situations where ITC will be reversed.
ITC will be reversed in the following cases-
ITC will be reversed for invoices which were not paid within 180 days of issue.
This is for ISD. If a credit note was issued by the seller to the HO then the ITC subsequently reduced will be reversed.
This is for businesses which use inputs for both business and non-business (personal) purpose. ITC used in the portion of input goods/services used for the personal purpose must be reversed proportionately.
This is similar to above except that it concerns capital goods.
This is calculated after the annual return is furnished. If total ITC on inputs of exempted/non-business purpose is more than the ITC actually reversed during the year then the difference amount will be added to output liability. Interest will be applicable.
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Can GST paid on reverse charge basis be considered as input tax?
Yes. The definition of input tax includes the tax payable under the reverse charge.
Is credit of all input tax charged on supply of goods or services allowed under GST?
A registered person is entitled to take credit of input tax charged on supply of goods or services or both to him which are used or intended to be used in the course or furtherance of business, subject to other conditions and restrictions.
Can ITC be claimed on lost or damaged goods?
No, a person cannot take input tax credit with respect to goods lost, stolen, destroyed or written off. It shall also apply to the input tax credit with respect to goods given as gifts or free samples.
Where the goods against an invoice are received in lots or instalments, how will a registered person be entitled to ITC?
The registered person shall be entitled to the credit only upon receipt of the last lot or installment.
Is credit of tax paid on every input used for supply of taxable goods or services or both is allowed under GST?
Yes, except a small list of items provided in the law, the credit is admissible on all items. The list covers mainly items of personal consumption, inputs use of which results into formation of an immovable property (except plant and machinery), telecommunication towers, pipelines laid outside the factory premises, etc. and taxes paid as a result of detection of evasion of taxes.
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