| Section-16 Manner of taking input tax credit |
| Sub-Section | Analysis |
| 1) Every registered taxable person shall, subject to such conditions and restrictions as may be prescribed and within the time and manner specified in section 35, be entitled to take credit of input tax admissible to him and the said amount shall be credited to the electronic credit ledger of such person | Section 9 says about taxable person, if Supply exceeds Rs.10 Lacs except in North East states including Sikkim where threshold limit is 5 Lacsa) Person registered under GST may only claim ITC
b) for claiming ITC, the registered person needs to comply some conditions and restriction as specified in section 35
c) ITC needs to be claimed within specified time
d) on filing of Return by seller, ITC shall be credited to buyer ELedger, which may be seen after login to site. | Section 35- says about Payment of Tax, It says that a) credit of IGST shall be first utilised for payment of IGST then for CGST and last for SGST
b) Credit of CGST shall be first utilised for CGST then for IGST.
c) Credit of CGST shall not be used for SGST
d) Credit of SGST shall be first utilised for SGST then for IGST.
e) Credit of SGST shall not be used for CGST |
| (2) A person who has applied for registration under the Act within thirty days from the date on which he becomes liable to registration and has been granted such registration shall, subject to such conditions and restrictions as may be prescribed, be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semifinished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act | The existing registered persons need to get themselves registered under GST within 30 days to get ITC on inputs held as stock and input contained in semifinished or finished goods |
| 2A) A person, who takes registration under subsection (3) of section 19, shall, subject to such conditions and restrictions as may be prescribed, be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semifinished or finished goods held in stock on the day immediately preceding the date of registration | Section 19(3) says about voluntary registration, means even he is not required under GST to get himself registered, may apply for registration and take ITC ITC on inputs held as stock and input contained in semifinished or finished goods |
| (3) Where any registered taxable person ceases to Section 8 deals with pay tax under section 8, he shall, subject to such conditions and restrictions as may be prescribed, be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semifinished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under section 7 | Section 8 deals with Composition Levy, person registered under composition scheme may not get ITC. But when he leave composition then he may take ITC from day immediately preceding the date from which he becomes liable to pay tax under section 7 |
| (3A) A taxable person shall not be entitled to take input tax credit under sub-section (2), (2A) or subsection (3)in respect of any supply of goods and / or services to him after the expiry of one year from the date of issue of tax invoice relating to such supply | ITC is to be claimed within period of one year from the date of invoice as similar to existing CCR- 2004 rules |
| (4) The amount of credit under sub-section (2), (2A) or sub-section (3) shall be calculated in accordance with generally accepted accounting principles in such manner as may be prescribed | ITC shall be calculated as per generally accepted accounting principles which shall be prescribed |
| 5) Where the goods and/or services are used by the registered taxable person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business | ITC may be claimed only for that portion which is for business purpose |
| (6) Where the goods and / or services are used by the registered taxable person partly for effecting taxable supplies and partly for effecting nontaxable supplies, including exempt supplies but excluding zero-rated supplies, the amount of credit shall be restricted to so much of the input tax as is attributable to the taxable supplies including zerorated supplies | GST taxed goods purchased by dealer and later it is used for GST taxed and / or Non-GST taxed goods or services and /or exempted supplies except zero-rated supplies then Credit of ITC shall be restricted only to extend of goods or services used for GST Taxed good or services |
| (7) The Central or a State Government may, by notification issued in this behalf, prescribe the manner in which the credit referred to in subsections (5) and (6) above may be attributed | Central or State government shall issue notification for ITC as may be claimable under subsection 5 and 6 as above |
| (8) Where there is a change in the constitution of a registered taxable person on account of sale merger, demerger, amalgamation, lease or transfer of the business with the specific provision for transfer of liabilities, the said registered taxable person shall be | Allowed to transfer the input tax credit that remains unutilized in its books of accounts to such sold, merged, demerged, amalgamated, leased or transferred business in the manner prescribed |
| (9) Notwithstanding anything contained in sub-section (1), (2), (2A) or (3) input tax credit shall not be available in respect of the following |
| (a) motor vehicles, except when they are supplied in the usual course of business or are used for providing the following taxable services— (i) transportation of passengers, or (ii) transportation of goods, or (iii) imparting training on motor driving skills | As like CCR-2004, ITC may not be claimed on motor vehicle when are not supplied in usual course of business. ITC over motor vehicle may be claimed by Tour operator but not by a company use motor vehicle for own purpose |
| (b) goods and / or services provided in relation to food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as leave or home travel concession, when such goods and/or services are used primarily for personal use or consumption of any employee | Similar to existing CCR- 2004, ITC may not be claimed for those supplies where these are used primarily for personal use or consumption of employee. Here the word primarily is significant. As these supplies should be directly or solely for employee. Like a meeting is held with consultant where employee of company are participated and some goods are supplied in meeting for consumption of Consultant as well as employees then. ITC may be claimed over such supply. But where there is meeting of employees only then ITC not allowable |
| (c) goods and/or services acquired by the principal in the execution of works contract when such contract results in construction of immovable property, other than plant and machinery | goods and/or services purchase by the principal in the execution of works contract of construction of immovable property then ITC may not be claimed although if it is for plant and machinery then ITC is allowable |
| (d) goods acquired by a principal, the property in which is not transferred (whether as goods or in some other form) to any other person, which are used in the construction of immovable property, other than plant and machinery | WCT contract for immovable property then ITC may not be claimed although if it is for plant and machinery then ITC is allowable |
| (e) goods and/or services on which tax has been paid under section 8; and | No ITC allowable to person registered under composition scheme. |
| (f) goods and/or services used for private or personal consumption, to the extent they are so consumed | ITC over personal consumption is not allowable |
| (10) Where the registered taxable person has claimed depreciation on the tax component of the cost of capital goods under the provisions of the Income Tax Act, 1961, the input tax credit shall not be allowed on the said tax component | Similar to existing CCR- 2004, if person claimed depreciation on the tax component of the cost of capital goods under the provisions of the Income Tax Act, 1961, the input tax credit shall not be allowed on the said tax component |
| (11) Notwithstanding anything contained in this section, but subject to the provisions of section 28, no registered taxable person shall be entitled to the credit of any input tax in respect of any supply of goods and/or services to him unless |
| a) he is in possession of a tax invoice, debit note, supplementary invoice or such other taxpaying document as may be prescribed, issued by a supplier registered under this Act or the IGST Act | ITC may be claimed by over taxpaying document like invoice, debit note, supplementary invoice or such other as prescribed |
| (b) he has received the goods and/or services | He should be in possession or goods and/or services |
| (c) the tax charged in respect of such supply has been actually paid to the credit of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply | Where GST need to be paid under Reverse charge mechanism then ITC may be claimed after payment of Tax |
| (d) he has furnished the return under section 27 | For Claiming ITC he has to file return as per section 27 |
| Provided that where the goods against an invoice are received in lots or instalments, the registered taxable person shall be entitled to the credit upon receipt of the last lot or instalment |
| (12) Where any registered taxable person who has availed of input tax credit switches over as a taxable person for paying tax under section 8 or, where the goods and / or services supplied by him become exempt absolutely under section 10, he shall pay an amount, by way of debit in the electronic credit or cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of such switch over or, as the case may be, the date of such exemption: Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger shall lapse |
| (13) The amount payable under sub-section (12) shall be calculated in accordance with generally accepted accounting principles in such manner as may be prescribed |
| (14) In case of supply of capital goods on which input tax credit has been taken, the registered taxable person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by the percentage points as may be specified in this behalf or the tax on the transaction value of such capital goods under sub-section (1) of section 15, whichever is higher |
| (15) A taxable person shall not be entitled to take input tax credit in respect of any invoice for supply of goods and/or services, after the filing of the return under section 27 for the month of September following the end of financial year to which such invoice pertains or filing of the relevant annual return, whichever is earlier | Person shall not be allowed claim ITC after filling of Annual Return |
| (16) Where credit has been taken wrongly, the same shall be recovered from the registered taxable person in the manner as may be prescribed in this behalf | Over taking wrong credit, Govt may recovered in such manner as prescribed |