Input Tax Credit - ITC

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INPUT TAX CREDIT
When we purchase goods we pay Input GST to dealer and when we sell the same then we collect output GST from customer. So when we pay Taxes to Tax Authorities, we deduct the one we paid during purchase this is called Input Tax credit .  Means while  paying tax we don't pay whole amount collected from customer but the difference between output GST(GST collected from customer while selling the goods) and Input GST (GST paid to dealer while purchasing goods), this adjustment is called Input Tax Credit.
Let us understand the same with the help of following illustrations
Input Tax Credit - ITC
Input Tax Credit ITC
Who can claim ITC
ITC can be claimed by a person registered under GST only if he meets ALL the conditions mentioned below.
a. The dealer should have tax invoice
b. The said goods/services have been received
c. Returns have been filed.
d. The tax collected has been paid to the government by the supplier.
e. When goods received in installments, Input Tax Credit can be claimed only after the last lot is received.
f. If depreciation has been claimed on tax component of a capital good, No ITC will be allowed

Note: Business registered under composition scheme in GST cannot claim ITC.
Input Tax Credit can be claimed only for business purpose Transactions. 
ITC will not be available for goods or services specifically used for: 
a. Personal use 
b. Exempt supplies 
c. Supplies for which ITC is not available
How to claim ITC
All regular taxpayers must file the amount of input tax credit(ITC) in their monthly GST returns in the Form GSTR-3B. Table below shows eligible ITC, Ineligible ITC and ITC reversed during the tax period.

Reversal of Input Tax Credit
ITC can be availed only on goods and services for business purposes. Apart from these, there are certain other situations where ITC will be reversed.
ITC will be reversed in the following cases-
1) Non-payment of invoices in 180 days
2) Credit note issued to ISD by seller
3) Inputs partly for business purpose and partly for exempted supplies or for personal 4) Capital goods partly for business and partly for exempted supplies or for personal use
5) ITC reversed is less than required
Reconciliation of ITC
ITC claimed by the person has to match with the details specified by his supplier in his GST return. In case of any mismatch, the supplier and recipient would be communicated regarding discrepancies after the filling of GSTR-3B. 
How to utilize the Input tax credit

In GST we have three types of taxes CGST, IGST, and SGST/UTGST.
IGST is applicable for the inter-state supply of goods/ services.
and for the intra-state supply of goods/services both CGST and SGST/UTGST are charged.
While payments are made for these taxes, input tax credit will be allowed in the following manner

 
Input Tax Credit - ITC
ITC Utilization

See Also : Goods and Service Tax GST       GST Registration Online

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