Input Tax Credit: the conditions in Section 16

The conditions a registered person must meet to claim ITC: tax invoice, receipt, credit reflected in GSTR-2B, tax actually paid by supplier, and return filed.

Under Section 16(2) of the CGST Act, a registered person can take ITC on inputs, input services and capital goods used in the course or furtherance of business only if all of these are satisfied:

1. They hold a tax invoice, debit note or other prescribed document.
2. The details have been furnished by the supplier in GSTR-1/IFF and communicated to the recipient in GSTR-2B (clause (aa)).
3. The goods or services have been received (including "bill-to-ship-to" deliveries to a third person on the recipient's direction).
4. The tax charged has been actually paid to the Government by the supplier.
5. The recipient has furnished the return under Section 39 (GSTR-3B).

Other key limits

• Payment within 180 days: if the supplier is not paid value + tax within 180 days of the invoice date, the ITC is reversed with interest and can be re-availed on payment (second proviso to Section 16(2), Rule 37).
• Time limit: see the article on Section 16(4).
• Blocked credits: Section 17(5), covered separately.
• Goods received in lots: ITC is available on receipt of the last lot.