How to claim Input Tax Credit (ITC)? Documents required to claim Input Tax Credit?

GST is considered as the greatest tax reform in the Indian history. Notwithstanding, one thing that has become the thought is – the instrument of input credit under GST.

In easy words, Input tax Credit implies at the tax paid on the sales or output, you are able to claim the tax you have just paid on purchases or input. For example, if you are a manufacturer and your tax payable on the output is Rs 500 and the tax you have paid on the input is Rs 300, you can claim input credit of Rs 300 and the tax you have to deposit is only Rs 200. Input tax credit is only available for you if you are an agent, supplier, manufacturer, e-commerce manager and registered under the GST.

In the following article, we'll cover the process to claim  Input Tax Credit (ITC) under GST and documents required and points to remember while claiming the input tax credit.

What are the documents and forms needed to claim Input Tax Credit?

Every candidate will require the accompanying documents to guarantee Input Tax Credit under GST:

• Supplier gave invoice for supplying the services and goods or both as per GST law.

• A debit note gave by the supplier to the recipient in case of tax payable or taxable incentive as indicated in the invoice is not exactly the tax payable or taxable incentive on such supplies.

• Bill of entry.

• A credit note or invoice which is to be given by the ISD (Input Service Distributor) as per the GST invoice rules.

• An invoice gave like the bill of supply under specific circumstances rather than the tax invoice. In the event that the amount is lesser than INR 200 or in conditions where the opposite charges are appropriate as indicated by the GST law.

• A supplier gave a bill of supply for goods and services or both according to the GST invoice rules.

(Read more about Goods and Services Tax)

The above documents arranged according to the GST invoice rules ought to be outfitted while recording the GSTR-2 structure. Inability to introduce these forms can prompt either rejection or resubmission of the solicitation.

For taxes paid on goods and services or both because of any misrepresentation or because of request for the demand raised, concealment of realities or wilful error, Input Tax Credit can't be asserted.

Since input credit will be accessible to the vender at each stage, the input tax credit is relied upon to cut down the general taxes charged on the product as of now. In this way, whenever input credit system works proficiently, last consumers may see the cost decrease.

10 Important points with respect to ITC

• For advance payment, the supplier is needed to pay tax on such development receipt however in case of the recipient, he can profit the ITC just when tax invoice is given and goods/services are gotten.

• ITC can't be profited based on a copy of the legitimate document.

• SGST paid in one state can't be used as credit for payment of SGST of another state.

• For payment of interest and penalty Input tax credit can't be used as such it should be paid utilizing electronic cash ledger.

• For asserting ITC goods/services must be really gotten. Henceforth the goods or services got by the agent or the job worker will be thought to be gotten by the recipient.

• On receipt of invoice by the recipient, invoice amount must be paid inside 180 days from the date of invoice. On the off chance that the recipient neglects to pay thus, the amount assumed as acknowledgment will be reversed and output tax will be payable on such amount. However on the later date, if the recipient pays the invoice amount, he can again guarantee the credit.

• On documenting the structure GSTR-2 (internal supplies subtleties) by the recipient, the credit guaranteed in the return will be credited to electronic credit ledger on the temporary premise. The recipient can record Form GSTR-3 and pay self-surveyed tax by assuming praise of input accessible in electronic credit ledger. Subsequent to filling of structure GSTR-3 by both supplier and recipient framework does the coordinating cycle. On the off chance that the supplier has paid the tax on the goods/services, ITC will be permitted to the recipient. In case during the coordinating cycle, any bungle is found due to-

a) duplication of guarantee or

b) If the input asserted by the recipient is in overabundance of output proclaimed by the supplier,

at that point, the over-abundance amount will be added to the output tax liability of the recipient and the tax amount will be needed to be paid alongside the interest.

• In case if goods (inputs and Capital goods both) has been gotten in installment or parcel against a solitary invoice at that point input can be profited on the receipt of last installment or part.

• GST paid under converse charge can likewise be used as ITC.

• In the event that goods or services bought/got are utilized for both business and non-business purpose, at that point just portion of ITC identifying with goods/administration utilized for business purpose will be permitted as a credit.Even in case of taxable and exempted goods/services, just the part identifying with taxable goods/administration will be permitted as a credit.