Eligibility and conditions for taking input tax credit., Section 16 of CGST Act, 2017

Posted on 18 May 2023 Category : GST

Section 16 of CGST Act, 2017, Eligibility and conditions for taking input tax credit

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The below post explains about Eligibility and conditions for taking input tax credit under section 16 of CGST Act,2017.

Section 16 of CGST Act, 2017 explains Eligibility and conditions for taking input tax credit as below: (The amendments if any will also be updated here soon).

The extract of Section 16 of CGST Act,2017 quoted below:

16 Eligibility and conditions for taking input tax credit.

16. (1) Every registered person shall, subject to such conditions and restrictions as

may be prescribed and in the manner specified in section 49, 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 and the said amount shall be credited to

the electronic credit ledger of such person.

(2) 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,––

(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;

(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;

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

(d) he has furnished the return under section 39:

Provided that 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:

Provided further that 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 one hundred and eighty 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 added

to his output tax liability, along with interest thereon, in such manner as may be

prescribed:

Provided also that the recipient shall be entitled to avail of the credit of input tax

on payment made by him of the amount towards the value of supply of goods or

services or both along with tax payable thereon.

(3) Where the registered person has claimed depreciation on the tax component of the

cost of capital goods and plant and machinery under the provisions of the Income-tax Act,

1961, the input tax credit on the said tax component shall not be allowed.

(4) A registered person shall not be entitled to take input tax credit in respect of any

invoice or debit note for supply of goods or services or both after the due date of furnishing

of the return under section 39 for the month of September following the end of financial year

to which such invoice or invoice relating to such debit note pertains or furnishing of the

relevant annual return, whichever is earlier.

The above information clarifies about Eligibility and conditions for taking input tax credit under section 16 of CGST Act,2017.

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