Conditions for taking Input Tax Credit (ITC) [Section 16(2) of CGST Act] - GST Ready Reckoner - GST

Eligibility and Conditions for taking Input Tax Credit (ITC) Condition for availing Input Tax Credit - Section 16(2) of CGST Act Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, Clause (a) He is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or Such other tax paying documents as may be prescribed under rule 36 of CGST Rules . Documentary requirements and conditions for claiming input tax credit Rule 36(1) - Eligible document for ITC a tax invoice issued by the supplier of goods services or both, as per section 31 CGST Act an invoice issued to payment of tax under reverse charge basis, as per section 31(3)(f) of CGST Act debit note issued by a supplier registered as per section 34 of CGST Act , or a bill of entry or similar document prescribed under Customs Act or Rules for assessment of IGST an invoice or credit note issued by a input services distributor as per rule 54(1) of CGST Rules 2017 Rule 36(2) - Requirement of all particular for ITC Input tax credit shall be availed by a registered person only if all the applicable particulars as specified in the provisions of Chapter VI are contained in the said document. The said document does not contain all the specified particulars but contains the details of:- the amount of tax charged, description of goods or services, total value of supply of goods or services or both, GSTIN of the supplier and recipient and place of supply in case of inter-State supply, input tax credit may be availed by such registered person. Rule 36(3) - No ITC if tax paid by supplier Fraudulently No input tax credit shall be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand has been confirmed on account of any fraud, willful misstatement or suppression of facts [under section 74 inserted vide N.No. 20/2024 dated 08.10.2024 ]. Rule 36(4) - Furnishing the details of outward supplies in return No input tax credit shall be availed by a registered person in respect of invoices or debit notes the details of which are required to be furnished under section 37(1) unless,- (a) The details of such invoices or debit notes have been furnished by the supplier in the statement of outward supplies in FORM GSTR-1, as amended in FORM GSTR-1A if any (inserted vide No. N.N. 12/2024 dated 10/07/2024) or using the invoice furnishing facility; and (b) the details of input tax credit in respect of such invoices or debit notes have been communicated to the registered person in FORM GSTR-2B under rule 60(7) of CGST Rules. Important Clarification Regarding Rule 36(4) of CGST Rules Clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for FY 2017-18 and 2018-19. [ Circular No. 183/15/2022-GST Dated 27th December, 2022 ] Clarification to deal with difference in Input Tax Credit (ITC) availed in FORM GSTR-3B as compared to that detailed in FORM GSTR-2A for the period 01.04.2019 to 31.12.2021 . [ Circular No. 193/05/2023-GST Dated 17th July 2023 ] It is clarified that consequent to insertion of clause (aa) to section 16(2) of the CGST Act and amendment of rule 36(4) of CGST Rules w.e.f. 01.01.2022, no ITC shall be allowed for the period 01.01.2022 onwards in respect of a supply unless the same is reported by his suppliers in their FORM GSTR-1 or using IFF and is communicated to the said registered person in FORM GSTR-2B . Clarification in respect of restriction in availment of input tax credit in terms of rule 36(4) of CGST Rules, 2017. [ Circular No. 123/42/2019 GST dated 11.11.2019 ] Clause (aa) The details of the invoice or debit note referred to in clause (a), has been furnished by the supplier in the statement of outward supplies [in GSTR-1] , and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37. [in GSTR-2B]. Clause (b) He has received the goods or services or both. Explanation - For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; [ Substituted vide Central Goods and Services Tax (Amendment) Act, 2018 w.e.f. 01-02-2019, For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services (Bill to ship to model) (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person. Important Notification Clarification Clarification on availability of input tax credit as per section 16(2)(b) of the CGST Act, 2017 in respect of goods which have been delivered by the supplier at his place of business under Ex-Works Contract (i.e. EXW). [ Circular No. 241/35/2024-GST Dated 31.12.2024 ] ITC Available - in respect of supply of other goods also where the contract between the supplier and recipient is an EXW contract, and as per terms of the contract, the goods are to be delivered by the supplier to the recipient, or to any other person (including a transporter) on behalf of the recipient, at his (supplier s) place of business and the property in the goods stands transferred to the recipient at the time of such handing over. In such cases, the said goods can be construed to have been received by the said recipient at the time of handing over the said goods to the recipient or to the transporter, as the case may be, as per provisions of Section 16(2)(b) of CGST Act . ITC not Available if the goods are found to have been diverted for non-business purposes at any stage, either before physically receiving the said goods at his business premises or subsequently, the registered person shall not be entitled to input tax credit on such goods in terms of section 16(1) of CGST Act . Further , if at any time after receiving the goods, such goods are lost, stolen, destroyed, written off or disposed of by way of gift or free samples, the registered person would not be entitled to the input tax credit in respect of such goods as per provisions of section 17(5)(h) of CGST Act. Clause (ba) the details of input tax credit in respect of the said supply communicated to such registered person under section 38 of CGST Act has not been restricted. Clause (c) subject to the provisions of section 41 or section 43A [Omitted vide Finance Act, 2022 w.e.f. 01-10-2022] , the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and Clause (d) He has furnished the return under section 39 : Where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: Where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of 180 days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be paid by him along with interest payable under section 50 as manner may be prescribed under rule 37 of CGST Rules . The recipient shall be entitled to avail of the credit of input tax on payment made by him to the supplier of the amount towards the value of supply of goods or services or both along with tax payable thereon.