What is ITC?
ITC – Input Tax Credit is the tax paid on inward supply of goods/services (e.g. purchases) that can be reduced when paying the Output liability.
Conditions for claiming ITC:
- Payment shall be made within 180 days.**
- Used for business purposes.
- Actual possession of invoices/debit notes/credit notes/bill of supply etc.
- Receipt of goods/services.
- Tax has been actually paid by the supplier.
- No ITC will be allowed if depreciation has been claimed on the tax component of capital goods
*If Inputs are received in lots – Can claim ITC only when the last lot is received.
**If not, ITC claimed will be added to the output liability along with interest. However, once the amount is paid, ITC can be re-claimed.
Time limit for claiming ITC?
- Due date of furnishing of next year’s september’s return (to which such invoice pertains)
- Furnishing of relevant annual return
Whichever is earlier.
When to avail and not to avail ITC under GST: