SUBMITTED TO:- SUBMITTED BY:-

MR. MANISH KUMAR GUPTA 16BCOM01

16BCOM04
16BCOM22
16BCOM28
 BASICS OF INPUT TAX CREDIT
It means goods, the value of which is capitalized in the books of account
CAPITAL of the person claiming the input tax credit and which are used or
GOODS intended to be used in the course or furtherance of business.

INPUT It means the central tax, State tax, integrated tax or Union territory tax
TAX charged on any supply of goods or services or both made to him.

INPUT It means any service used or intended to be used by a supplier in the

SERVICE course or furtherance of business.
OUTPUT It means the tax chargeable under this Act on taxable supply of goods or services
or both made by him or by his agent but excludes tax payable by him on reverse
TAX charge basis.

INWARD It means receipt of goods or services or both whether by purchase,

SUPPLY acquisition or any other means with or without consideration.

It means supply of goods or services or both, whether by sale, transfer, barter,

OUTWARD exchange, licence, rental, lease or disposal or any other mode, made or agreed to
SUPPLY be made by such person in the course or furtherance of business.
 CREDIT AVAILMENT CREDIT UTILISATION
• It means recording credit in • It means using credit availed
statutory records. or taken to pay output tax or
• It results in increase in credit other eligible sums.
balance. • It results in decrease in
credit balance.
 ITC UTILISATION

1st to be utilized for payment

Credit Balance if any
of

CGST CGST IGST

IGST IGST CGST and then SGST/UTGST

SGST/UTGST SGST/UTGST IGST

 CONDITIONS FOR TAKING CREDIT
To claim input credit under GST –
• You must have a tax invoice(of purchase) or debit note issued by
registered dealer
(Note: Where goods are received in lots/instalments, credit will be
available against the tax invoice upon receipt of last lot or instalment.)
• You should have received the goods/services
(Note: Where recipient does not pay the value of service or tax thereon
within 3 months of issue of invoice and he has already availed input
credit based on the invoice, the said credit will be added to his output
tax liability along with interest.)
CONTD….
• The tax charged on your purchases has been deposited/paid to the
government by the supplier in cash or via claiming input credit.
• Supplier has filed GST returns
(Possibly the most path breaking reform of GST is that input credit is
ONLY allowed if your supplier has deposited the tax he collected from
you. So every input credit you are claiming shall be matched and
validated before you can claim it.)
Therefore, to allow you to claim input credit on Purchases all your
suppliers must be GST compliant as well.
 OTHER CONDITIONS OF TAKING CREDIT
• GOODS IN LOTS/INSTALMENTS :

Where goods The taxable person

against a single can take credit upon
invoice is receipt of last lot or
received, in lots instalment
or instalments
• FAILS TO PAY TO SUPPLIER :

If sum not paid to supplier within 180 days from the date of issue of invoice

Details of such supply, amount of value not paid and ITC availed of proportionate to such amount not paid shall
be furnished in FORM GSTR-2 for the month immediately following the period of 180 days

ITC availed shall be added to the output tax liability

Interest shall be payable u/s 50(1)

Time limit u/s 16(4) shall not apply for re-availing of a credit
• DEPRECIATION CLAIMED ON TAX :

TOTAL COST
(INCLUDING TAX)

If Depreciation charged on If Depreciation charged on

COST TOTAL COST
ITC Available ITC not Available
TIME LIMIT FOR TAKING ITC
ITC can be availed within

1 year from the date of

Invoice

September following the

end of financial year

Date of filing of Annual

Return

Whichever is earlier
 ITC claims day for semi-furnished
Situation goods/stock/finished goods (held on immediate
preceding day)

If a person has applied for registration or is liable to

Day from when he is liable to pay taxes
register or is granted registration

When a person takes voluntary registration Registration day

When a taxable registered person stops paying taxes in

Day from when he is liable to pay tax normally u/s 7.
composition levy scheme
 ITEMS INELIGIBLE FOR CREDIT
Ø Motor Vehicles or Conveyances -
Input tax credit can be claimed for motor vehicles or conveyance only when they are used for making a
further supply of such vehicles or conveyances or transportation of passengers or imparting training or
for transportation of goods. Hence, expenses related to the normal use of motor vehicles for office
purposes cannot be claimed as an input tax credit.

Ø Food, Beverages and Outdoor Catering

Expenses relating to food, beverages and outdoor catering can be claimed as input tax credit only when
inward supply of goods or services or both of a particular category is used by a registered person for
making an outward taxable supply of the same category of goods or services or both or as an element of
a taxable composite or mixed supply. Hence, regular taxpayers would not be eligible for claiming input
tax credit on expenses relating to food, beverages and catering.
Ø Beauty Treatment, Health Services & Cosmetic and Plastic Surgery
Beauty treatment, health services, cosmetic and plastic surgery related expenses cannot be claimed
as input except when inward supply of goods or services or both of a particular category is used by a
registered person for making an outward taxable supply of the same category of goods or services
or as an element of a taxable composite or mixed supply.

Ø Life and Health Insurance

Expenses relating to rent-a-cab facilities, life or health insurance can be claimed as input tax credit
only when the Government notifies it as services which are obligatory for an employer to provide to
its employees under law. Else, to claim input tax credit, the inward supply must have been used for
making an outward taxable supply of the same category or as part of a taxable mixed supply.

Ø Works Contract Services

Works contract services, when supplied for construction of an immovable property (other than
plant and machinery), cannot be claimed as input tax credit. However, work contract services can be
claimed as an input tax credit when it is an input service for the further supply of works contract
service.
ØConstruction of Immovable Property
Goods or services received by a taxable person for construction of an immovable property
(other than plant or machinery) on his own account or even when it’s used in the course or
furtherance of business cannot be claimed as input tax credit. Under GST Act, construction
includes re-construction, renovation, additions or alterations or repairs.

ØNon-Resident Taxable Person

Goods or services received by a non-resident taxable person except on goods imported by him
is not eligible for input tax credit.

ØPersonal Consumption
Goods or services used for personal consumption is not eligible for input tax credit.

ØComposition Supply
Goods or services or both on which tax has been paid under the Composition Scheme will not
be eligible for input tax credit. Also tax paid as interest, penalty or fine will not be eligible for
input tax credit.
Short video:-

https://www.youtube.com/watch?v=S8OuYsqrwWk&t=1s