Taking Credit in as it is from 2B without ensuring other major conditions fulfilment than litigation is on your way!!!

 Major Conditions to claim an input tax credit under GST

Following conditions under Sec 16 to be followed for claiming ITC under GST.

1.    Input tax credit is eligible for claims if the goods or services purchased are further used for business purposes and not for personal use.

2.   Buyer must hold such tax invoice or debit note or document evidencing payment towards the purchase. 

3.    Tax invoice or debit note is filed by the supplier in Form GSTR-1 and it appears in the buyer’s Form GSTR-2B. 

4.    As per Section 16(2)(aa), from 1st January 2022, the benefit of provisional ITC claims is no longer available.  The amount of ITC reported in GSTR-3B will be a total of actual ITC in GSTR-2B provided above conditions are also followed. The provisional ITC of 5% of actual ITC in GSTR-2B will no longer be allowed. 

5.   The buyer must pay towards the supply of goods and/or services within 180 days from the invoice date. If they fail to, then the ITC already claimed will be added back to output tax liability and interest must be paid on such tax. ITC claim will be reinstated once the payment is made to the supplier.

6.   No ITC will be allowed if depreciation has been claimed on the tax component of a capital good purchased. 

7.   ITC on a tax invoice or debit note belonging to a financial year must be claimed within the time limit given.

8.    Common credit of ITC must be identified and split as it is used together for selling both exempt and taxable supplies, and/or business and non-business activity.

9.   There are certain items listed down that are not eligible for ITC claims under Section 17(5) of the CGST Act, known as blocked credits under Section 17(5) of the CGST Act.

Above provision make it clear that just amount reflecting in 2b does not meant that credit available.


Read More:

https://taxunlock.blogspot.com/2022/03/e-invoicing-under-gst.html

https://taxunlock.blogspot.com/2022/03/gst-provisions-for-selling-through.html

https://taxunlock.blogspot.com/2022/02/registration-under-gst.html




Location: India

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