INPUT TAX CREDIT AVAILMENT AND UTILISATION

How to avail and utilise the credit of these taxes:

  

• Credit of CGST should be utilised first for payment of CGST and than for payment of IGST.

• Credit of SGST/UGST should be utilised first for payment of SGST/UGST and than for payment of IGST.

• Credit of IGST should be utilised first for payment of IGST then for the payment of CGST and at last for the payment of SGST/UGST.

Note: Credit of CGST cannot be used for payment of SGST/UTGST
                                                          and 
          Credit of SGST/UTGST cannot be utilised for payment of CGST.

Some of the technical aspects of the scheme of Input TaxCredit are as under:

• Any registered person can avail credit of tax paid on the inward supply of goods or services or both, which is used or intended to be used in the course or furtherance of business. 
• The pre-requisites for availing credit by registered person are:

                a. He is in possession of tax invoice or any other specified tax paying document.
 
                b. He has received the goods or services. “Bill to ship” scenarios also included.

                c. Tax is actually paid by the supplier.
                
                d. He has furnished the return.
                
                e. If the inputs are received in lots, he will be eligible to avail the credit only when 
                    the last lot of the inputs is received.


                f. He should pay the supplier, the value of the goods or services along with the tax
                    within 180 days from the date of issue of invoice, failing which the amount of
                    credit availed by the recipient would be added to his output tax liability, with 
                    interest [rule 2(1) & (2) of ITC Rules].

                   However, once the amount is paid, the recipient will be entitled to avail the credit 
                   again. In case part payment has been made, proportionate credit would be 
                   allowed.

Documents on the basis of which credit can beavailed are:

1.  Invoice issued by a supplier of goods or services or both.
   
2. Invoice issued by recipient alongwith proof of payment of tax
   
3. A debit note issued by supplier
   
4. Bill of entry or similar document prescribed under Customs Act
   
5. Revised invoice
   
6. Document issued by Input Service Distributor