Section 16 of the GST Act outlines the conditions that need to be met for a registered person to claim Input Tax Credit (ITC). ITC is the credit that a registered person can claim for the taxes paid on inputs used in the course or furtherance of their business.
To claim ITC, the following conditions must be met:
- Possession of a valid tax invoice or debit note: The registered person must possess a valid tax invoice or debit note issued by the supplier for the supply of goods or services.
- Receipt of goods or services: The registered person must have received the goods or services.
- Payment of tax: The tax payable on such goods or services must have been paid by the supplier to the government.
- Furnishing of return: The registered person must have furnished their GST return on time.
- Utilization of goods or services: The goods or services for which ITC is claimed must have been used in the course or furtherance of the registered person’s business.
Additionally, there are certain circumstances where ITC cannot be claimed. For example, ITC cannot be claimed for goods or services used for personal purposes or for goods or services that are specifically excluded from the GST regime.
In summary, to claim ITC, a registered person must have a valid tax invoice, must have received the goods or services, the tax payable must have been paid by the supplier, the registered person must have furnished their GST return on time, and the goods or services for which ITC is claimed must have been used in the course or furtherance of their business.
Know the Writer:
Ravi Kumar Saini is the founder member of “Taxslim Venture“. At Taxslim Venture, we understand that tax laws and regulations can be complex and overwhelming, especially for small and medium-sized businesses. That’s why we offer our expertise as GST consultants in Gurgaon, Delhi, and Noida to help our clients navigate the world of taxes and compliance.
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