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.

When ITC cannot be availed?

ITC cannot be availed in case of any contract services. The input tax credit cannot be availed on the immovable property except if the services are going to be used for further contract services.

When to avail Input Tax credit?

ITC can be availed only to the extent that the purchases and the expenses are for consumption, use, or supply in commercial activities. To claim ITC the expenses or the purchases should be reasonable in quality, nature, cost.

Is it possible to refund the income tax credit?

As per section 54 (3) of the CGST Act,2017 a registered person can claim a refund of the unutilized input tax credit at the end of any credit. A tax period is a period for which the return is required to be furnished. Thus a taxpayer can claim a refund of the unutilized ITC on monthly basis.

How much ITC can be claimed?

A taxpayer can claim ITC to 20% of the eligible ITC that is reported by the supplier in the auto-generated GSTR 2A return.

GST Input Tax Credit Reconciliation

What is input tax credit?

The input tax credit is the central tax (CGST), state tax (SGST), integrated tax (IGST), or cess that is paid by a person and has a GST registration on the supply of goods or services. GST input tax includes the tax that is paid on a reverse charge basis and the IGST charged on the import of goods. But, input tax does not include the tax paid on the composite taxation scheme.

The input tax credit is the tax paid by a business on the purchase and this tax is used to reduce the tax liability when a sale is made. The taxation levy is based on the value that is added at each stage of the supply chain until it reaches the consumer.

The Goods and the Service Tax Act is levied on the goods and the services based on the principle of value addition. To negate the cascading effect of the tax liability that is paid on the procurement of the raw materials, consumables, plants, and machinery, etc. This element of offsetting the tax liability is called the input tax credit.

Every person with a GST registration in the supply chain takes part in control, collects the GST tax, and remitting the amount that is collected. To avoid double taxation and the cascading effect of the tax input credit is provided to set off tax paid on the procurement of the raw materials, consumables, goods, or services that are used in the manufacturing, supply, and sale of goods or services.

The business can achieve neutrality using the input tax credit mechanism in the incidence of tax and ensure that the input tax element is not entering into the cost of production or the cost of supply of goods and services.