Section 16 CGST Act 2017 : Eligibility and condition for taking input tax credit.

By | April 16, 2017
(Last Updated On: November 9, 2023)

Section 16 CGST Act 2017

[ Section 16 CGST Act 2017 Notified w.e.f 01.07.2017 vide Notification No. 9/2017 – Central Tax Dated 28th June, 2017 ]

Section 16 CGST Act 2017 explains Eligibility and condition for taking input tax credit and is covered on Chapter V – Input Tax Credit 

[Note : CGST Act 2017 also known as CENTRAL GOODS AND SERVICES TAX ACT, 2017 assented by the President of India on 12-4-2017 -An Act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and the matters connected therewith or incidental thereto. ]

Eligibility and condition for taking input tax credit.

16. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed [ Note -1,  2 , 3 ,4,5,6 ,7,8 ,9 ,9A, 9B,10,12,13,17] 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;

18[(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;]

(b) he has received the goods or services or both.

14 [Explanation.—For the purposes 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 movement 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. ]

19[ (ba) the details of input tax credit in respect of the said supply communicated to such registered person under section 38 has not been restricted;]

(c) subject to the provisions of  15 section 41 20[***], the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation 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:

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 21[paid by him along with interest payable under section 50],  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 22[to the supplier] 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 the23[thirtiethday of November]  following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.[Note-11 ]

“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.”. [Note -16]


Notes on  Section 16 CGST Act 2017

23.Substituted for “due date of furnishing of the return under section 39 for the month of September” by the Finance Act, 2022, w.e.f. 1-10-2022.

22.  Inserted by the Finance Act, 2023, w.e.f. 1-10-2023.

21.Substituted for “added to his output tax liability, along with interest thereon” by the Finance Act, 2023, w.e.f. 1-10-2023.

20.Words “or section 43A” omitted by the Finance Act, 2022, w.e.f. 1-10-2022.

19.  Inserted by the Finance Act, 2022, w.e.f. 1-10-2022.

18. Inserted by the Finance Act, 2021, w.e.f. 1-1-2022.

17 Notification No 2/2019 Central Tax (Rate) Dated 7th March, 2019 To give composition scheme for supplier of services or Goods with a tax rate of 6% having annual turn over in preceding year upto Rs 50 lakhs.  Notification No 9/2019 Central Tax (Rate) Dated 29 th March, 2019 Seeks to amend notification No. 02/2019- Central Tax (Rate) so as to provide for Reversal of ITC on Stock and application of Composition rules to persons opting to pay tax under notification no. 2/2019- Central Tax (Rate).

16. Order No 02/2018 Central Tax Dated 31.12.2018 : Extension of due date for availing ITC of FY 2017-18

15. Substituted for “section 41” by the Central Goods and Services Tax (Amendment) Act, 2018, with effect from a date yet to be notified.

14. Substituted by the Central Goods and Services Tax (Amendment) Act, 2018, with effect from a date yet to be notified. Prior to its substitution, Explanation 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;”

13  Notification No 14/2018 Integrated Tax (Rate)  Dated 26 th July, 2018 Seeks to amend notification No. 8/2017- Integrated Tax (Rate) so as to notify IGST rates of various services as recommended by Goods and Services Tax Council in its 28th meeting held on 21.07.2018.

12 Notification No 13/2018 Central Tax (Rate) Dated 26th July, 2018  New CGST rates of various services

11. Refer Q 22 of GST FAQs on Financial Services Sector published by CBIC

1. . To notify the rates for supply of services under UTGST Act vide Notification No. 11/2017-Union Territory Tax (Rate) Dated the 28th June, 2017

2.. To notify the rates for supply of services under CGST Act vide Notification No. 11/2017-Central Tax (Rate) Dated 28th June, 2017

3. To notify the rates for supply of services under IGST Act vide Notification No. 8/2017-Integrated Tax (Rate) Dated 28th June, 2017

4. Seeks to amend notification No. 11/2017-CT(R) to reduce CGST rate on specified supplies of Works Contract Services, job work for textile & textile products, printing service of books, newspapers etc, admission to planetarium, and, also to provide option to GTA & transport of passengers by motorcab service providers to avail full ITC & discharge CGST @ 6% Vide Notification No 20/2017 Central Tax (Rate) Dated 22nd August, 2017

5.Seeks to amend notification No. 08/2017-IT(R) to reduce IGST rate on specified supplies of Works Contract Services, job work for textile & textile products, printing service of books, newspapers etc, admission to planetarium, and, also to provide option to GTA & transport of passengers by motorcab service providers to avail full ITC & discharge IGST @ 12% Vide Notification No 20/2017 Integrated Tax (Rate) Dtd 22nd Aug 2017

6. Seeks to amend notification No. 11/2017-UTT(R), to reduce UTGST rate on specified supplies of Works Contract Services, job work for textile & textile products, printing service of books, newspapers etc, admission to planetarium, and, also to provide option to GTA & transport of passengers by motorcab service providers to avail full ITC & discharge UTGST @ 6% vide Notification No 20/2017 Union Territory Tax (Rate) Dtd 22nd Aug 2017

7. Seeks to amend notification No. 11/2017-CT(R) to reduce CGST rate on specified supplies of Works Contract Services vide Notification No 24/2017 Central Tax (Rate) dated 21st September, 2017

8. Seeks to amend notification No. 08/2017-IT(R) to reduce IGST rate on specified supplies of Works Contract Services. vide Notification No. 24/2017-Integrated Tax (Rate) dated  the 21st September, 2017

9. Seeks to amend notification No. 11/2017- UTT(R) to reduce UGST rate on specified supplies of Works Contract Services vide Notification No 24/2017 Union Territory Tax (Rate) dated21st September, 2017

9A  Notification No 31/2017 Central Tax (Rate)  Dated 13th October, 2017 Seeks to amend notification No. 11/2017-CT(R) 

9B Notification No 39/2017 Integrated Tax (Rate) dated 13th October, 2017 Seeks to amend notification No. 8/2017-Integrated Tax (Rate).

10. Seeks to amend notification No. 11/2017-CT(R) so as to specify rate @ 2.5% for standalone restaurants and @9% for other restaurants, reduce rate of job work on “handicraft goods” @ 2.5% and to substitute “Services provided” in item (vi) against Sl No. 3 in table. vide Notification No 46/2017 Central Tax (Rate) Dated 14th November, 2017

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