ITC(Input Tax Credit)

ITC(Input Tax Credit):

ITC is available in respect of taxes paid on any supply of goods or services used or intended to be used in the course or furtherance of business (i.e. for business purposes) 

 Negative list approach for non-allowance of ITC 

 ITC of tax paid on goods or services used for making taxable supplies by a taxable person allowed subject to four conditions:  possession of invoice;

  receipt of goods or services; 

 tax actually paid by supplier to government; 

 furnishing of return 

  Full ITC allowed on capital goods in one go 

 Proportionate credits allowed in case inputs, inputs services and capital goods are partly used for business and partly for non-business purposes 

 Proportionate credits allowed in case inputs, inputs services and capital goods are used for taxable including zero rated and exempt (including non-taxable) supplies 

 ITC cannot be availed after filing of return for the month of September of next Financial Year or filing of Annual Return 

 ITC available only on provisional basis for a period of two months until payment of tax and filing of valid return by the supplier 

 Matching of supplier’s and recipient’s invoice details 

 ITC to be confirmed only after matching of such information 

 ITC to be reversed in case of mis-match 

 Input Service Distributor mechanism for distribution of ITC of input services