Central Goods & Services Tax Act, 2017
CHAPTER - V
INPUT TAX CREDIT
Section 16 : Eligibility and conditions for taking input tax credit
(1) Every registered person shall, subject to such conditions and restrictions as
may be prescribed and in the manner specified in section 49, be entitled to
take credit of input tax charged on any supply of goods or services or both
to him which are used or intended to be used in the course or furtherance
of his business and the said amount shall be credited to the electronic credit
ledger of such person.
(2) Notwithstanding anything contained in this section, no registered person
shall be entitled to the credit of any input tax in respect of any supply of
goods or services or both to him unless,––
(a) he is in possession of a tax invoice or debit note issued by a supplier
registered under this Act, or such other tax paying documents as may
be prescribed;
(b) he has received the goods or services or both.
1[Explanation.—For the purpose of this clause, it shall be deemed that the
registered person has received the goods or, as the case may be, services-
(i) where the goods are delivered by the supplier to a recipient or any
other person on the direction of such registered person, whether acting
as an agent or otherwise, before or during movements of goods, either
by way of transfer of documents of title to goods or otherwise;
(ii) where the services are provided by the supplier to any person on the
direction of and on account of such registered person.]
(c) subject to the provisions of 2[section 41 or section 43A], the tax charged
in respect of such supply has been actually paid to the Government,
either in cash or through utilization of input tax credit admissible in
respect of the said supply; and
(d) he has furnished the return under section 39:
Provided that where the goods against an invoice are received in lots
or instalments, the registered person shall be entitled to take credit
upon receipt of the last lot or instalment:
1 Substituted “Explanation” vide The CGST (Amendment) Act, 2018 (No. 31 of 2018)
dt. 29/08/2018 w.e.f. 01/02/2019. Prior to substitution, it read as under :
“Explanation.—For the purposes of this clause, it shall be deemed that the registered
person has received the goods where the goods are delivered by the supplier to a
recipient or any other person on the direction of such registered person, whether acting
as an agent or otherwise, before or during movement of goods, either by way of
transfer of documents of title to goods or otherwise;”
2 Substituted vide Central Goods and Services Tax (Amendment) Act, 2018 w.e.f. ……
before it was read as “section 41”
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Central Goods & Services Tax Act, 2017
Provided further that where a recipient fails to pay to the supplier of
goods or services or both, other than the supplies on which tax is
payable on reverse charge basis, the amount towards the value of
supply along with tax payable thereon within a period of one hundred
and eighty days from the date of issue of invoice by the supplier, an
amount equal to the input tax credit availed by the recipient shall be
added to his output tax liability, along with interest thereon, in such
manner as may be prescribed:
Provided also that the recipient shall be entitled to avail of the credit of
input tax on payment made by him of the amount towards the value of
supply of goods or services or both along with tax payable thereon.
(3) Where the registered person has claimed depreciation on the tax
component of the cost of capital goods and plant and machinery under the
provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on
the said tax component shall not be allowed.
(4) A registered person shall not be entitled to take input tax credit in respect
of any invoice or debit note for supply of goods or services or both after the
due date of furnishing of the return under section 39 for the month of
September following the end of financial year to which such invoice or
3[……] debit note pertains or furnishing of the relevant annual return,
whichever is earlier.
4[Provided
that the registered person shall be entitled to take input tax
credit after the due date of furnishing of the return under section 39 for
the month of September, 2018 till the due date of furnishing of the
return under the said section for the month of March, 2019 in respect of
any invoice or invoice relating to such debit note for supply of goods
or services or both made during the financial year 2017-18, the details
of which have been uploaded by the supplier under sub-section (1) of
section 37 till the due date for furnishing the details under sub-section
(1) of said section for the month of March, 2019.]
3 Omitted vide Finance Act, 2020 dated 27/03/2020 w.e.f. ………… before it was read as
“invoice relation to such”
4 Inserted vide Order No. 02/2018-Central Tax dated 31/12/2018.
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