Input Tax Credit rules under GST
GST comprises the following levies:-
Central Goods and Services Tax (CGST) [also known as Central Tax] is levied on intra-state or intra-union territory on the supply of goods or services or both.
State Goods and Services Tax (SGST) [also known as State Tax] is levied on the supply of goods or services or both within the same state.
Union Territory Goods and Services Tax(UTGST) [also known as Union Territory Tax] is levied on the supply of goods or services within the same union territory.
Integrated Goods & Services Tax (IGST) [also known as Integrated Tax) on inter-state supply of goods or services of both.
The input tax credit of these components of GST would be allowed in the following manner:-
The credit of CGST – Allowed 1st for payment of CGST and the balance can be utilized for the payment of IGST. The credit of CGST is not allowed for payment of SGST.
The credit of SGST/ UTGST – Allowed 1st for payment of SGST/UTGST and the balance can be utilized for the payment of IGST. The credit of SGST/ UTGST is not allowed for payment of CGST.
The credit of IGST – Allowed 1st for payment of IGST, then for payment of CGST, and the balance for payment of SGST/ UTGST.
This has been explained in the following table:-
| Credit of | To be utilised 1st for the payment of | Maybe utilised further for the payment of |
| CGST | CGST | IGST |
| SGST/UTGST | SGST/ UTGST | IGST |
| IGST | IGST | CGST, then SGST/ UTGST
|
Only a Registered Person would be able to claim the benefit of Input Tax Credit of GST. Moreover, a registered person would be eligible to claim input tax credit on fulfilment of the following conditions:-
He is in possession of Tax Invoice or any other specified tax paid document.
He has received the goods or services. “Bill to ship” scenarios also included.
Tax is actually paid by the supplier.
He has furnished the GST Return.
If the inputs are received in lots or installments, he would be eligible to avail the ITC only when the last lot or installment is received.
The payment should be made within 180 days from the date of issue of invoice. In case the payment is not made within 180 days, failing which the amount of credit availed by the recipient would be added to his output tax liability along with interest. However, once the amount is paid, the recipient would be entitled to avail the credit again. In case part payment has been made, proportionate credit would be allowed.
Created & Posted By Aashima Verma
Accounts Executive at TAXAJ
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