Section 16 - Eligibility and conditions for taking input tax credit.

Input tax credit entitlement requires invoice, receipt, tax payment and filing conditions before ledger credit is allowed.

Entitlement to Input Tax Credit requires prescribed conditions: possession of a tax invoice or prescribed document from a registered supplier, receipt (or deemed receipt) of goods or services, tax in respect of the supply actually paid to the Government (cash or permitted credit utilisation), and filing the prescribed return. Credit is excluded where depreciation has been claimed on the tax component of capital goods, subject to a statutory time limit for claiming credit tied to the annual return cycle, and a recipient's failure to pay the supplier within the prescribed period triggers addition of the availed credit to output liability with interest, though credit may be restored upon payment.