Last updated: March 13th, 2020 6:39 PM

GST Input Tax Credit FAQs

IndiaFilings has helped thousands of business file their GST returns since the rollout of GST. In this article, we have compiled some of the FAQs we received from Entrepreneurs on GST input tax credit. Want to know more about GST input tax credit? Read the IndiaFilings Guide on GST input tax credit.

What is GST input tax?

Input tax refers to the central tax (CGST), state tax (SGST), integrated tax (IGST) or cess paid by a person with GST registration on the supply of goods or services. GST input tax also includes tax paid on reverse charge basis and IGST charged on import of goods. However, input tax does not include tax paid under composition levy.

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 input tax credit provided for all purchases of a person registered under GST?

A registered person can use the credit of input tax charged on supply of goods or services used or intended to use in the course or furtherance of business, subject to conditions. Some types of goods and services may not be eligible for an input tax credit. List of services not eligible for the input tax credit.

What are the conditions for availing input tax credit?

The registered taxable person shall satisfy the following four conditions for obtaining ITC: in possession of tax invoice or debit note or such other tax paying documents; he has received the goods or services or both; the supplier has actually paid the tax charged in respect of the supply to the

1. The taxpayer is in possession of tax invoice or debit note or such other tax paying documents as may be prescribed.
2. The taxpyaer has received the goods or services or both.
3. The supplier has actually paid the tax charged in respect of the supply to the government.
4. The taxpayer has filed the GST return

Can a person take input tax credit without payment of an invoice?

Yes, the recipient can take an input tax credit. However, the taxpayer should pay the consideration along with tax within 180 days from the date of issue of the invoice. This condition is not applicable where tax is payable on reverse charge basis.

What is the time limit for availing GST ITC?

A registered person cannot take the input tax credit in respect of any invoice or debit note for the supply of goods or services after the due date for furnishing the GST annual return. If the annual return is filed before the due date, then no change can be made after the filing of GST annual return. Know more about GST return filing.

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.

How to avail ITCon goods or services used partly for business?

The input tax credit of goods or services attributable only to the purpose of business can be taken by the registered person. The manner of calculation of eligible input tax credit is provided in GST rules.

What happens when the details of inward supplies furnished by the recipient do not match with the outward supply details furnished by the supplier in his valid return?

In case of mismatch, the supplier and recipient would be updated about the mismatch. If the taxpayer fails to correct the mismatch, then the mismatched amount shall add to the output liability of recipient in the return for the month succeeding the month

Is input tax credit allowed only after matching?

No, the input tax credit shall allow provisionally for two months. The system matches the supply details and the communicates the discrepancies to the concerned supplier and recipient. In case mismatch continues, the process shall reverse the ITC automatically.

Can provisionally allowed input tax credit to be used for payment of all liabilities?

No, the taxpayer can use provisionally allowed input tax credit only for the payment of self-assessed output tax in the return.