Provisions under Section 16 of the Central Goods and Services Tax (CGST) Act, 2017 relating to “Eligibility and Conditions for taking Input Tax Credit (ITC)”:
Section 16 of CGST Act 2017: Eligibility and Conditions for taking Input Tax Credit (CHAPTER V – INPUT TAX CREDIT)
(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.
(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,–
(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37; [clause inserted from 01/01/2022: refer Note 3]
(b) he has received the goods or services or both.
Explanation.- For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services-
(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person. [explanation substituted from 01/02/2019: refer Note 1(a)]
(ba) the details of input tax credit in respect of the said supply communicated to such registered person under section 38 has not been restricted; [clause inserted from 01/10/2022: refer Note 4(a)]
(c) subject to the provisions of section 41 or section 43A [text inserted on 29/09/2018 pending commencement – Note 1(b)/ text omitted from 01/10/2022 – Note 4(b)] the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
(d) he has furnished the return under section 39:
Provided that where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment:
Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon paid by him along with interest payable under section 50 [text substituted from 01/10/2023: refer Note 6(i)] in such manner as may be prescribed:
Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him to the supplier [text inserted from 01/10/2023: refer Note 6(ii)] of the amount towards the value of supply of goods or services or both along with tax payable thereon.
(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed.
(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September thirtieth day of November [text substituted from 01/10/2022: refer Note 4(c)] following the end of financial year to which such invoice or invoice relating to such [text omitted from 01/01/2021: refer Note 2] debit note pertains or furnishing of the relevant annual return, whichever is earlier.
Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019. [proviso inserted from 31/12/2018: refer Note 5]
| Note: CBEC notifies 01/07/2017 as the commencement date vide Notification 9/2017. |
Amendments History:
1. Amendments vide Section 8 of the CGST (Amendment) Act, 2018, followed with Notification 2/2019 on commencement date of 01/02/2019 (except for clause (b) below for which effective date will be separately notified later):
a) Explanation to clause (b) of sub-section (2) substituted; and
b) In clause (c) of sub-section (2), the text ‘section 41 or section 43A’ substituted for the text “section 41”.
2. In sub-section (4), the text “invoice relating to such” omitted vide Section 120 of the Finance Act 2020, followed with Notification 92/2020 on commencement date of 01/01/2021.
3. Clause (aa) has been inserted in sub section (2), vide Section 109 of the Finance Act 2021, followed with Notification 39/2021 on commencement date of 01/01/2022.
4. Amendments vide Section 100 of the Finance Act 2022 followed with Notification 18/2022 on commencement date of 01/10/2022:
(a) Clause (ba) has been inserted in sub section (2);
(b) In Clause (c) of sub section (2), the text “or section 43A” omitted; and
(c) In sub section (7), the text “due date of furnishing of the return under section 39 for the month of September” substituted with the text “thirtieth day of November”.
5. Proviso to sub-section (4) inserted vide ROD Order 2/2018 dated 31/12/2018 applicable from 31/12/2018.
6. Amendments vide section 137 of the Finance Act, 2023, followed with Notification 28/2023 on commencement date of 01/10/2023:
i) in the second proviso to sub-section (2), the text “added to his output tax liability, along with interest thereon”, substituted with the text “paid by him along with interest payable under section 50”;
(ii) in the third proviso to sub-section (2), the words “to the supplier” inserted.
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| CGST Act 2017: Last updated 15/02/2024 |
| The CGST Act 2017 has been notified vide GOI Notification dated 12/04/2017, which has subsequently been amended through the CGST (Extension to J&K) Act 2017, Finance Act 2018, CGST Amendment Act 2018, Finance Act 2019, Finance Act 2020, Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance/Act 2020, Finance Act 2021, Finance Act 2022, Finance Act 2023, CGST Amendment Act 2023, CGST Second Amendment Act 2023 & Finance Act, 2024 including various Notifications/Orders issued by the Govt./ CBIC from time to time, relating to the commencement dates of various sections and provisions in the respective CGST/Amendment Acts, wherever required. Information on this page is a section-wise compilation of the amendments to the CGST Act, 2017 made through various notifications issued by CBIC from time to time (upto 15th February, 2024), with the best possible efforts for accuracy. In any case, E&OE. For official or updated information, please visit the CBIC website. |
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