GST Input Tax Credit


  • Section: Section 16 of the Central Goods and Services Tax (CGST) Act, 2017.

  • Purpose: The purpose of GST input tax credit is to avoid cascading effect of taxes and provide relief to businesses from paying tax on tax. It allows registered taxpayers to claim credit for taxes paid on their purchases of goods or services, which can then be used to offset their GST liability.

  • Applicability: Any registered person who has purchased goods or services for business purposes and paid GST on them can claim input tax credit. However, there are certain conditions that need to be fulfilled to claim input tax credit:
  1. The taxpayer should be a registered person under GST.
  2. The goods or services should have been used or intended to be used for business purposes.
  3. The taxpayer should have a valid tax invoice or other prescribed document for the purchase.
  4. The supplier should have filed GST returns and paid GST due to the government.
  5. The taxpayer should have received the goods or services.

  • Timeline: Input tax credit can be claimed by a registered person in the same tax period in which the goods or services were received, or in the subsequent tax period. However, the credit for invoices issued in the previous financial year can be claimed till the due date for filing the GST return for September of the following financial year, or the annual return for that year, whichever is earlier.

  • Exemption: Input tax credit cannot be claimed for certain purchases, such as:
  1. Goods or services used for personal consumption or for non-business purposes.
  2. Goods or services used for making exempt supplies.
  3. Goods or services used for making supplies outside India.
  4. Motor vehicles, except for those used for providing certain specified services.
  5. Goods or services used for construction of immovable property, except for certain specified cases.

  • Penalty not doing: If a taxpayer claims input tax credit incorrectly or without fulfilling the conditions, it may lead to a penalty. The penalty for incorrect input tax credit is 10% of the amount claimed or Rs. 10,000, whichever is higher.

  • Due date: Input tax credit should be claimed in the GST return for the relevant tax period. The due date for filing GST returns varies depending on the taxpayer's turnover and type of registration.

  • Forms: Input tax credit can be claimed through Form GSTR-3B, which is a monthly summary return, and Form GSTR-2A, which is an auto-populated form generated by the GST portal based on the purchases made by the taxpayer.

  • Reporting authority: Input tax credit is reported to and verified by the GST authorities through the taxpayer's GST returns. The returns are filed online on the GST portal.

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