This is a very important feature of GST Law. Under GST Law entire supply chain would be subject to GST to be levied by Central and State Governments concurrently.
GST Law allows credit of CGST, SGST/UTGST & IGST.
ITC can be availed within one year from the date of invoice. ITC is not allowed beyond September following the financial year to which the invoice pertains or date of filing annual return, whichever is earlier.
Cross utilization of CGST & SGST is not allowed. In other words, CGST cannot be utilized for payment of SGST and vice-e-versa.
Similarly, credit of IGST is required to first utilized for payment of IGST, then CGST and then SGST/UTGST.
Credit of tax paid on the inward supply of goods or services or both can be availed by any registered person used or intended to be used in the course or furtherance of business.
Pre-requisites for availing credit:
- Possession of tax invoice or any other specified document;
- Receipt of goods or services.
- Payment of tax by the supplier
- Return is furnished by the person availing credit.
- Credit is taken on receipt of last lot when goods are received in lots
- Value of goods or services along with tax is paid within 180 days from the date of issue of invoice.
Credit allowed on the basis of the following documents:
- Tax invoice issued by the supplier
- Supplementary invoice/Debit Notes
- Self Invoice issued by the recipient (RCM)
- Bill of Entry or similar documents prescribed under CA, 1962
- Revised Invoice
- Document issued by the Input Service Distributor
Where goods or services or both are used by the registered person partly for the purpose of business and partly for other purposes, ITC is restricted as is attributable to the purpose of business.
- Motor Vehicles & conveyances except;
- Foods, Beverages Outdoor catering, Beauty Treatment, Health Services, Cosmetic & Plastic Surgery;
- Membership of a Club, Health & Fitness Centre;
- Rent-a-Cab, Life Insurance, Health Insurance except where it is mandatory for an employer under any Law.
- Leave Travel/Home Travel Concessions extended to employees.
- Works Contract Service when supplied for construction of immovable property (other than plant & machinery) except where it is an input service for further supply of works contract.
- Goods and/or services on which tax has been paid under Composition Scheme.
- Goods and/or services used for private or personal consumption, to the extent they are consumed;
- Goods lost, stolen, destroyed, written off, disposed of by way of gift or free samples.
- Any tax paid due to short payment on account of fraud, suppression, mis-declaration, seizure, detention.