Can GST paid on reverse charge basis be considered as input tax?

Yes. The definition of input tax includes the tax payable under the reverse charge.

What are the conditions for availing input tax credit?

Following four conditions are to be satisfied by the registered taxable person for obtaining ITC: is in possession of tax invoice or debit note or such other tax paying documents as may be prescribed; he has received the goods or services or both; the supplier has actually paid the tax charged in respect of the supply to the The taxpayer is in possession of tax invoice or debit note or such other tax paying documents as may be prescribed. The taxpyaer has received the goods or services or both. The supplier has actually paid the tax charged in respect of the supply to the government. The taxpayer has filed the GST return

Can a person take input tax credit without payment of invoice?

Yes, the recipient can take input tax credit. However, the taxpayer would be required to pay the consideration along with tax within 180 days from the date of issue of invoice. This condition is not applicable where tax is payable on reverse charge basis.

What is the time limit for availing GST input tax credit?

A registered person cannot take input tax credit in respect of any invoice or debit note for supply of goods or services after the due date for furnishing the GST annual return. If annual return is filed before the due date, then no change can be made after filing of GST annual return.

Can input tax credit be claimed on lost or damaged goods?

No, a person cannot take input tax credit with respect to goods lost, stolen, destroyed or written off. In addition, input tax credit with respect to goods given as gifts or free samples are also not allowed.

How to avail ITC on goods or services used partly for business?

The input tax credit of goods or services attributable only to the purpose of business can be taken by registered person. The manner of calculation of eligible input tax credit is provided in GST rules.

What happens in case of invoice mismatch during reconciliation?

In case of mismatch, the supplier and recipient would be updated about the mismatch. If the mismatch is not rectified, then the amount will be added to the output liability of recipient in the return for the month succeeding the month in which discrepancy is communicated.

Is input tax credit allowed only after matching?

No, input tax credit is allowed provisionally for two months. The supply details are matched by the system and discrepancies are communicated to concerned supplier and recipient. In case mismatch continues, the ITC taken would be reversed automatically.

Can provisional input tax credit be used for GST payment?

No, provisionally allowed input tax credit can be used only for the payment of self-assessed output tax in the return.

GST Input Tax Credit Reconciliation

What is GST input tax?

Input tax is the central tax (CGST), state tax (SGST), integrated tax (IGST) or cess paid by a person having GST registration on supply of goods or services. GST input tax also includes tax paid on reverse charge basis and IGST charged on import of goods. However, input tax does not include tax paid under composition levy.

Input tax credit or the ITC is a tax that a business pays on a purchase and can use to reduce the tax liability when it makes a sale. The levy of taxation is based on the value-added at each stage of the supply chain until it reaches the consumer.

Goods and Service Tax Act was levied on goods and services based on the principle of value addition. In such a tax system to negate the cascading effect of the tax liability paid on procurement of raw materials, consumables, plants, and machinery, etc. This element used to offset the tax liability is called an input tax credit.

Under GST, every person having GST registration in the supply chain takes part in controlling, collecting the GST tax, and remitting the collected amount.

To avoid double taxation and the cascading effect of tax input, the tax credit is provided to set off tax paid on the procurement of raw materials, consumables, goods, or services used in the manufacturing, supply, and sale of goods or services.

Using the input tax credit mechanism, the business can achieve neutrality in the incidence of tax and ensure that such input tax element does not enter into the cost of production or the cost of supply of goods and services.