Input tax credit on retention money: adjust credit only when supplier's tax liability is reduced, not for contractual withholding.
Availability of input tax credit should not be conditioned on payment to the supplier where tax liability is fixed by law independent of receipt. Contractual reductions or retentions in invoice value should lead only to proportionate adjustment of credit when the supplier's tax liability is reduced; reversals solely for delayed or withheld commercial payments are inappropriate. (AI Summary)