Input Tax Credit In GST

What Is Input Tax Credit In GST? And How To Claim It?

The input tax credit (ITC) applies to the tax charged by the seller on the purchase of products or services.

The input tax credit (ITC) applies to the tax charged by the seller on the purchase of products or services. The tax charged at the time of procurement, when reduced from the debt owed on outward supplies, is referred to as the production tax credit. In other words, the production tax credit is a tax offset from the output tax owed on purchases.


Basically, an input credit implies that the producer of the products/commodities may minimize the amount of tax paid for that specific commodity/item in the event of making tax payment for the output/sale of goods or services. In other words, an ITC (Input Tax Credit) means a break on the taxes collected on the inputs from the taxes payable on the outputs. If a certain good(s)/commodity or service(s) is supplied to a taxable individual, the GST paid shall then be referred to as the input tax.


The definition is not completely new, since it already existed in the system of indirect taxes (service tax, VAT and excise duty) before GST. Now its spectrum under GST has been expanded. Previously, it was not possible to claim the central income tax, entry tax, luxury tax and other taxes as a production tax credit. Moreover, the Federal Excise tax may not be asserted by suppliers and service providers. Here you are going to learn much more about What Is Input Tax Credit In GST? And How To Claim It?. So, let’s read the entire information mentioned below.


The tax credit is the pillar of GST, and it is of primary importance to enrolled individuals. This is pretty much in accordance with the pre-GST regulations. In their approach, these measures are very rigorous and accurate.

The time limit for the GST ITC to be used


The ITC should be used in a particular way only within a defined time frame by a registered taxable individual. The following table illustrates the various cases in which semi-finished products or stock or finished goods may be claimed for the inputs.



ITC claims a day for semi-furnished goods/stock/finished goods (held on the immediate preceding day)

Where a person has applied for registration or is responsible for registration or has been granted registration

Day from when he is liable to pay taxes

When a person takes voluntary registration

Registration day

Where a licensed taxable individual ceases to pay taxes under the composition levy scheme

Day from when he is liable to pay tax normally u/s 7.


What Are The Documents You Will Need To Have With You To Claim Input Tax Credit (ITC)

Each applicant will require the following documents in order for him/her to claim input tax credit (ITC) under GST:

  • The seller has submitted a bill in compliance with GST legislation for the offer of services and products or both.
  • In the case of tax payable or taxable costs as stated in the invoice, a debit notice given by the seller to the receiver is far less than the tax payable or taxable price for those materials.
  • The entrance bill.
  • A credit note or invoice that is to be issued in compliance with the GST bill rules through the ISD (Input Service Distributor).
  • A bill given in preference to the tax bill, such as the invoice / bill of delivery, under some conditions. If the sum is less than Rs . 200 or under the terms under which, in compliance with GST regulation, the reverse payments are available.
  • A seller has released a bill of supply in accordance with the GST invoice regulations for goods / commodities and services or both.

How You Can Claim Input Credit?

(a) For the acquisition or a debit note given by a licenced broker, you should have a tax bill / invoice.


Note: As goods are bought in lots / instalments, credit shall, upon delivery of the last lot or instalment, be made available against the tax invoice.


(b) You should have offered the products / services.


Note: If the purchaser may not pay the expense of the service or tax thereon within 3 months of the issuance of the invoice and has already taken use of the input credit dependent solely on the invoice, the aforementioned credit score, along with interest, would be added to his / her production tax liability.


(c) The tax levied on your transactions was deposited / paid to the authority in cash by the dealer or by claiming credit input.

(d) The retailer has sent its GST returns.


Probably, the most striking GST change is that input credit is only permitted if the tax he / she received from you was deposited by your supplier. So, before you can finally assert it, and input credit that you are going to claim will be matched and confirmed.


Thus, all of your vendors must also be GST compliant in order to allow you to demand input credit on transactions.


There's also something about input credit than you should know:


(e) Unclaimed input credit is possible because taxes are higher on transactions than on sales. You are entitled to step on or demand a refund in this sort of case.


Conditions On Which You Can Claim Input TaX Credit


  1. You need to be registered under GST Law
  2. A tax invoice or debit notice issued by the licenced supplier specifying the volume of the tax
  3. It is important to have obtained goods or services
  4. The seller should have filed returns and billed the government tax on them.
  5. ITC can say on receipt of the last lot or instalment if products are received in sections or in instalments.
  6. If the input tax credit is included in the expense of capital goods and the depletion of that tax is claimed, no input tax credit is permissible.
  7. If the same has not been received within the specified time period, input tax credits would not be permitted.



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