Condition and restrictions on claiming Input Tax Credit

Every registered person shall, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business, subject to such conditions and restrictions as may be prescribed.

Here we are discussing the documentary requirements and conditions for claiming Input tax credit. As per Rule 36 of CGST rules 2017, following are the considerations:

Documents required for claiming Input Tax Credit :

1. An invoice issued by the supplier of goods or services or both in accordance with the provisions of section 31 i.e. normal tax invoice under GST
2. An invoice issued in accordance with the provisions of clause (f) of sub-section (3) of section 31, subject to the payment of tax i.e. invoice issued in respect of liability paid under Reverse Charge Mechanism
3. A debit note issued by a supplier
4. A bill of entry or any similar document prescribed under the Customs Act, 1962 or rules made thereunder for the assessment of integrated tax on imports
5. An invoice, credit note or any other documents issued by Input Service Distributor

Condition for claiming Input Tax Credit :

1. Input tax credit will be available if the document contains all the applicable particulars as specified in the provisions of Chapter VI i.e. all provisions in relation to valid tax invoice and/or debit note must comply.
2. The relevant information, as contained in the said document, is furnished in FORM GSTR-2 by such person. At present, filing of form GSTR 2 is not applicable such that input tax credit can be availed on basis of valid document as mentioned above subject to the condition that the supplier has uploaded his invoice on GST portal and duly filed his GST returns.
3. It is specified that the below given details should be mandatorily available on the document to claim input tax credit viz:

a. Amount of tax charged
b. Description of goods and services
c. Total value of supply of goods or services or both
d. GSTIN of supplier and recipient both and
e. Place of supply in case of inter-state supply

Restriction on claiming Input Tax Credit :

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, wilful misstatement or suppression of facts.

In respect of invoices or debit notes, the details of which have not been uploaded by the supplier or invoices, the details of which are not reflecting on GST portal under GSTR 2A of recipient, the input tax credit can be availed in the following manner:

Up to 9th October 2019

Input tax credit can be availed in respect of all the invoices available i.e. there is no need to match invoices with those reflecting in GSTR 2A

From 9th October 2019 to 31st March 2020

Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers (i.e. supplier has not filed his return or tax has not been paid by him), shall not exceed the specified per cent of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers in accordance with GST law.
Specified Percent are:

• Up to 31st December 2019 – 20% (Notification Number 49/2019 Central tax dated 09-10-2019)
• From 1st January 2020 onwards – 10% (Notification Number 75/2019 Central tax dated 26-12-2019)

From 1st February 2020 to 31st August 2020

Input tax credit can be availed only in respect of those invoices which are appearing in GSTR 2A i.e. where the supplier has filed his return and paid tax in accordance with GST law (to be called as eligible input)

It is also provided that condition of claiming input tax credit on provisional basis shall apply cumulatively for Period February 2020 to August 2020 and the return in Form GSTR-3B for the tax period September 2020 shall be furnished with the cumulative adjustment of input tax credit for the said month i.e. condition of restricting ITC to 110% of GSTR 2A figure for the month of Feb , March, April, May, June, July, August 2020 shall be applied CUMULATIVELY in the GSTR 3B of September 2020. (Notification Number 30/2020 Central tax dated 03rd April 2020).