Rules Regarding Input Tax Credit under GST

ITC aka Input Tax Credit is known to be the Tax that is to be paid by the buyer of the specified goods while purchasing the same and the amount for the same is available for the buyers to avail of as a deduction from tax payable. All the people registered under GST can avail of this mechanism for Input Tax Credit under GST and claim the same on all purchases.

Input tax credit (ITC)  is the backbone of GST, and GST is essential to streamline credit flows and ensure that ITCs are handled smoothly, making GST a good, transparent, and simple tax. Specific Conditions are required to be fulfilled and followed correctly to be eligible to file the returns, in addition, Input Tax Credit is a simple Process.

Furthermore, the essential requirement is a registered taxable person. Input tax credit provisions are applicable only in the case of business purchases and not for individual use. In order to correctly claim Input Tax Credit under GST, Input Tax Credit Rule is to be followed.

Input Tax Credit is not allowed on the following items:

1. Services of General Insurance, Servicing, Repair and Maintenance
2. Membership in a Club, Health and Fitness Centre
3. Rent-a-cab, Health insurance and life insurance except for certain cases where it is allowed by the Government
4. Travel benefits that are extended to employees on vacation for example: leave or home travel concession
5. For an immovable Property construction under work contract service 
6. Goods and/or services required for the construction of immovable property, whether for personal or business purposes
7. Where the tax has been paid for the Composition scheme under GST for Goods and/or services
8. Goods and/or services that have been used for personal issue
9. Where a non-resident taxable person receives any Goods and/or services except for the ones imported by him
10. Lost Goods or stolen or destroyed or written off or disposed of by way of gift or free sample
11. Special Cases of standalone restaurants where they will charge GST @ 5% but cannot avail of the benefit of ITC

Time limit to claim an input tax credit under GST:

The time limit to claim Input Tax Credit  against a debit note or an invoice is earlier than below mentioned two dates:

1. The due date for filing GST returns for September of the next financial year. 

2. The date of filing the annual returns in form GSTR-9 relating to that financial year. 

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