INPUT TAX CREDIT (ITC), BASIC CONDITIONS FOR TAKING CREDIT AND DOCUMENTS REQUIRED UNDER GOODS AND SERVICES ACT, 2017 (GST ACT)

Every GST registered person, with some exceptions, is entitled to take credit of input tax (ITC) charged by his supplier on any supply of goods or services or both which are used or intended to be used in the course or furtherance of business of such registered person.


Exception with regard to person, are that a registered person working under composition scheme cannot take Input Tax Credit (TC) even when he has received goods or services which are used in furtherance of his business.

Another exception is that a non-resident taxable person is also not eligible for credit of input tax (ITC) on receipt of goods and services except on goods imported by him.

Self-assessed credit has to be taken in the electronic credit register provisionally after filing monthly return prescribed for this purpose.

Credit cannot be taken after the expiry of one year from the date of issue of tax invoice relating to such supply.

Basic Conditions for taking credit

Possession of Taxpaying documents such as tax invoice, debit note etc.

Goods/services should have actually been received/deemed to be received by the taxable person.

Tax charged on the invoice should have been paid to the credit of government.

Return should have been furnished by the taxpayer.

Credit for goods against an invoice received in lots /instalments can be availed only on receipt of last lot in instalment.

Documents for availing credit

An invoice issued by the supplier of goods or services or both,

A debit note issued by a supplier

A bill of entry

An invoice issued under Reverse Charge; and

A document issued by an Input Service Distributor (ISD)