Credit In Specific Circumstances

Input Tax Credit rules under GST: eligibility, documentation, reversal, and time limits explained

A registered person is entitled to claim input tax credit (ITC) on GST paid for goods or services used in business, subject to prescribed documentation and conditions. Registration is mandatory, and credit ceases upon cancellation, with reversal obligations, though courts have ruled against retrospective denial. Suspension halts credit eligibility. ITC is allowed despite wastage within norms and applies broadly to business use, not just manufacturing. Credit utilization across businesses under one GSTIN is permitted, with matching requirements evolving over time. Time limits exist for claiming ITC, with distinctions between limitation and prescription affecting enforceability. Receipt of goods or services is required, including deemed receipt in certain cases. Non-payment to suppliers within 180 days triggers credit reversal, reclaimable upon payment. ITC is disallowed on capital goods' tax component if depreciation is claimed. New rules mandate reversal of ITC if suppliers fail to file returns timely, with provisions for interest and re-availment. The burden of proof lies on the claimant to establish ITC eligibility.