According to the defined terms, input credit under GST implies the clause of reduction in tax payable on output concerning the tax already paid on input purchase. For example, if the manufacturers have already paid an amount of ₹ 300 on input purchased and the final tax on output is ₹450 then he is required to pay only the balance amount to settle the tax claim. The firm’s dealing in direct taxation in Pune assists the business houses in settling such tax mechanisms under the goods service tax act. 

The input tax credit mechanism comes under the GST act and implies that a registered manufacturer, suppliers, e-commerce operators etc. fall under the category of input credit tax already paid on the respective gross purchases.

Claim under the respective head of GST

For cleaning the respective scheme of credit under GST, one must present a purchase tax invoice or a note of debit issued by a respective registered dealer with whom the dealing has been done and, secondly, the receipt of goods or services.

In case the shipment has been received in installments or lots, credit is only claimed under the tax invoice or receipt of the latest or last shipment. Moreover, if the dealer has not paid the value of GST on inputs for a maximum of 90 days from the invoice issue date, then he is sought to have claimed the input credit benefits, and the outstanding tax amount is added to his credit along with interest on the same.

  • As per the amount of tax levied on your purchase should have been cleared by the dealer via cash or input credit.
  • GST returns should be compulsorily filed by the supplier.
  • The invoice should be uploaded by the supplier in gstr1, and the same should appear in gstr 2B of the buyer.
  • As per section 16 (2) (aa), certain specific conditions have to be fulfilled by the recipients before cleaning the input GST tax credit. This includes the above documents should be in position, and the GST invoice should be reported in GSTR 3B.

Dominantly this reform of GST serves that the respective credit is allowed only when the supplier of the inputs has already deposited the tax paid by the dealers on inputs. Therefore every input credit must match and validate before claiming the same.

Additional points important to be acknowledged

Input tax credit under GST does not fall under the category of direct taxes in India. Since this is a tax levied on input and output, that is, goods and services, therefore, this is not a part of direct tax in India. 

  • ITC is even available in categories of zero-rated supply or taxable supply.
  • Moreover, if the tax and voice have expired for more than one year from the invoice date, then the credit as per the input value under GST cannot be claimed. 
  • The input tax credit should be availed before the last date of filing the subsequent year’s September return or, otherwise, the annual return, whichever falls first.
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