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GST tracks, calculate, and levies GST payments, credits, and liability using three ledgers: electronic credit ledger, electronic liability register, and electronic cash ledger. These three ledgers are accessible to taxpayers on the GST website. You must access the electronic credit ledger to check the balance of the input tax credit (ITC). This article explains how to check Input Tax Credit in the GST portal.

What is ineligible/blocked ITC?

Taxes paid according to

Section 74 – Unpaid or short-paid tax due to fraud or over-refund

Section 129 – Detention, confiscation and delivery of goods and transportation

Section 130 – Determination of confiscation or delivery of goods and penalties

Fraud includes fraud, willful misrepresentation, concealment of facts, confiscation and forfeiture of goods.

Such cases where taxes were not paid with intent to evade are prohibited by the ITC to penalize such tax assessments. 

What is blocked credit list under GST?

Below is the blocked credit list under GST:

Motor vehicles and conveyances

(a) The ITC is blocked for motor vehicles or vehicles used to transport persons.

(b) ITC is also not available for general insurance service, repair, maintenance or service of motor vehicles or transportation.

This restriction applies to vehicles with an approved passenger capacity of 13 or less (including the driver).

Exception:

ITC is available for motor vehicles/vehicles used for the following taxable items:

  • Further supply of vehicles or conveyances
  • Passenger transportation
  • Imparting training on driving such vehicles or conveyances

Vessels and aircraft

(a) ITC is not available for vessels and aircraft

(b) Service and general insurance, ship and aircraft repair, maintenance and service services are also prohibited from claiming the ITC

Exception:

  • Further Supply of vessels or aircraft
  • Passenger transportation
  • Imparting training on driving such vehicles or conveyances
  • Transportation of goods

Membership of a club, health & fitness centre

Fees paid for memberships such as clubs, gyms or fitness centres are not deductible for GST.  

Works contract service

Labour contract services used to construct a real property are not eligible for input tax deductions unless they serve as advance services for additional labour contract services.

Construction includes renovation, reconstruction, addition, or alteration. 

Restaurant

The restaurant can’t deduct the tax paid on the receipt as they are liable to pay GST at a reduced tax rate of 5%. However, this restriction does not apply to in-house restaurants where the tariff rate is Rs 7,500 or more.  

Composition Scheme

A composition tax is an optional levy collection system designed for small taxpayers of the Goods and Services Tax (GST) system. A constituent dealer who opts for a composition levy must pay GST on a quarterly basis at a prescribed percentage of turnover. A composition trader is not entitled to claim ITC from GST paid on inward supplies.

Personal Consumption

Goods or services used for personal purposes are blocked credits. For example, ITC does not apply to GST paid when purchasing a laptop for personal use.

The question here is whether a credit is available if the input is used both privately and for business. In this case, the concept of common credit applies. 

Free sample

Goods offered as free samples are excluded from the ITC.  

Employee travel benefits

 GST paid on employee travel expenses will be blocked from claiming credit. For example, Tata provided vacation packages to employees on leave. In this case, the nominated company cannot claim a deduction for the GST paid for this travel expense. However, ITC is not limited to where.

  • Employee travel benefits are required under current law
  • Travel is for business purposes  

Non-resident taxable person

Goods or services purchased by a non-resident taxpayer are not covered under ITC. However, non-residents can claim credits for the importation of goods.  

Other goods or services

ITC shall not be available in the case of the following goods or services:

  • Outdoor catering
  • Health services
  • Beauty treatment services
  • Food and beverages
  • Cosmetic & plastic surgery

However, input on the above-mentioned goods or services can be claimed where the category of inward and outward supply of goods or services is the same.

What is the ITC credit ledger in GST?

Maintain electronic liability register specified under section 49 in form GST PMT – 02.

 Every claim of input tax credit self-assessed by a taxpayer shall be credited to this ledger. 

Amounts available in this ledger are useful to pay output tax.

No entry is made directly in the electronic credit ledger.

 Ledger may include the following:

  •  ITC on inward supplies from registered a taxpayer
  •  ITC is available based on distribution from input service distributor
  •  ITC on the input of stock held/semi-finished goods or finished goods and in stock on the day immediately preceding the date on which the taxpayer became a taxpayer on the condition that he applied for registration within 30 days after the tax liability arose.
  •   Permissible ITC on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day f conversion from composition scheme to regular tax scheme.
  • ITC is eligible for reverse charge payments.

How do I download ITC credit Ledger?

Electronic credit ledgers allow taxpayers to see not only their current credit details but also provisional and blocked credit details. 

To download the Electronic Credit Ledger, follow these steps:

  1. Go to the GST website.
Click Electronic Credit Ledger
Click Electronic Credit Ledger
  1. Use valid credentials to log in at GST Portal. Click the Services ➜ Ledgers ➜ Electronic Credit Ledger option.
  1. Click the Electronic Credit Ledger link. This allows taxpayers to view additional credit ledger details. Negative amounts in the Electronic Credit Ledger cannot be used to pay liabilities.
Select the From and To dates
Select the From and To dates
  1. To view the transactions of the Electronic Credit Ledger, select the From and To dates. Tap the GO button.
Details of the Electronic Credit Ledger
Details of the Electronic Credit Ledger
  1. The details of the Electronic Credit Ledger are displayed. To view further details, scroll to the right.

Note: 

If the tax officer has an amount in excess of the taxpayer’s electronic credit ledger available balance, post a billing transaction for that amount to that taxpayer’s electronic credit ledger.

In such cases, the electronic credit ledger balance will be negative.

Later, put a credit to the electronic credit ledger after the adjustment of the amount against the negative balance.

  1. Click the SAVE AS PDF and SAVE AS EXCEL buttons to save your electronic credit ledger in PDF and Excel format.
  1. Click the description (Unblock/Block) hyperlink to view the details of the tax officer who blocked/unblocked the credit amount.
  1. To close the window, click OK.

Provisional Credit Balance:

Click Provisional Credit Balance
Click Provisional Credit Balance
  1. To view your provisional credit balance, click the link.
  1. The Provisional Credit Balance statement is displayed.
Save as PDF and Save as EXCEL
Save as PDF and Save as EXCEL
  1. Click the Save as PDF and Save as EXCEL buttons to save provisional credit balances in PDF and Excel format.

Blocked Credit Balance: 

Click the Blocked Credit Balance
Click the Blocked Credit Balance
  1. Click the Blocked Credit Balance link to view the ITC amount available in your Electronic Credit Ledger that has been blocked by the Jurisdictional Tax Officer.
Select the From and To dates
Select the From and To dates
  1. To view the, blocked credit balance select the From and To dates.
 Save as PDF and Save as EXCEL
Save as PDF and Save as EXCEL
  1. Click the Save as PDF and Save as EXCEL buttons to save blocked credit balances in PDF and Excel format.
  1. Click on the attachment hyperlinks to view all documents uploaded by the tax authorities.

How is ITC credited?

Credit Input Tax Credit (ITC) in the following ways:

Credit from CGST – You are can pay CGST first and the balance to pay IGST. CGST credits are not eligible for SGST payment.

SGST/UTGST credits – First credit to pay SGST/UTGST. Use the balance for IGST payments. Credit SGST/UTGST is not eligible for CGST payment.

Credits from IGST – Pay IGST payments first, then CGST payments, and then pay the balance of SGST/UTGST.

CreditsTo be utilized 1st for the payment ofMaybe utilized further for the payment of
CGSTCGSTIGST
SGST/UTGSTSGST/UTGSTIGST
IGSTIGSTCGST, then SGST/UTGST

How do I claim an ITC refund from GST?

To claim an ITC refund from GST follow the below procedure:

  1. Visit the GSTIN website and fill out the refund application form.
  1. After submitting your electronic application, you will receive an email or SMS with an acknowledgement number.
  1. Both cash and return ledgers will be adjusted automatically, as will the carry-forward input tax credit.
  1. Refund applications, including submitted documents, will be scrutinized within 30 days of submission of the refund application.
  1. If the application for the claim is rejected, the refund will be transferred to the Consumer Welfare Fund (CWF).
  1. If the refund requested by an individual exceeds the set refund amount, a pre-audit process will occur before the refund is approved.
  1. Refunds will be credited electronically to the applicant’s account via NEFT, RTGS, or ECS.

Individuals can submit a refund application at the end of each quarter.

If the refund amount is less than Rs.1000, it is not refundable to individuals.

When can you claim ITC GST?

Claim input tax credit against an invoice/ debit note or credit note before the end of the following dates, whichever is earlier –

  • The due date of  GST returns filing for September of the next financial year
  • Date of filing an annual return for that financial year. 

However, if you don’t claim any credit till the filing return of March 2019, any such credit will lapse and you cannot claim even through GSTR 9 annual return.

A GSTR 9 annual return cannot claim an input tax credit if another GST return has not already claimed it.

How do you check the cash ledger from the GST portal?

An electronic cash ledger contains an overview of all deposits made by taxpayers. In the ledger, information is visible head-to-head. ie. IGST, CGST, SGST/UTGST, CESS. Each main header is further divided into the five sub-headers: Tax, Interest, Penalty, Fee, and Others.

To view your electronic cash ledger, follow the following steps:

1. Visit the GST website. Login with valid credentials.

2. Click the Services ➜ Ledgers ➜ Electronic Cash Ledger.  

4.  The Electronic Cash Ledger page appears. Cash balances are under the Cash balance by a date column.

Note: You can view a summary of your cash balances by clicking the amount link displayed below the cash balances for the date. 

5. Select the Electronic Cash Ledger option.

6. To view the electronic cash ledger select the From and To dates. Click the GO button.

Note: One can view the Electronic money ledger for up to 12 months.

7. Click the “SAVE AS PDF” and “SAVE AS EXCEL” buttons to save your electronic cash ledger in PDF and Excel format.

How do I check my ITC 04?

Manufacturers prepare form ITC-04 under GST. It displays the specifics of inputs or capital goods dispatched or received from a job worker during a given quarter.

GST ITC-04 filing deadline is the 25th of the month following the quarter. There are no late fees for GST ITC – 04 returns. However, if the manufacturer fails to submit the item’s details, it affects his ITC. 

To check ITC-04:

  • Login on GST portal
  • Click on service at the dashboard
Select  Returns, ITC Forms
Select Returns, ITC Forms
  • Select Returns, then select ITC Forms from the sub-menu.
Select GST ITC-04
Select GST ITC-04

  • Select GST ITC-04 form and prepare it online or offline.

What is the difference between ITC reversed and ineligible ITC?

Reversal ITC

  • Reversal of ITC means that previously used input, input, and capital goods credits are now added to the output tax liability, effectively voiding previously claimed credits.
  • Depending on when you apply for reversal, you may be required to pay interest.
  1. The default interest rate is 24% per annum only for the reclaim of previously reversed credits. In all other cases, interest is paid at 18% per annum [under section 50(1)].
  2. ITC reversal is filed in GSTR 3B.

Ineligible ITC:

  • Details paid for inward supplies are included in a negative list and are therefore not eligible for an input tax credit.
  • This should be reported to the taxpayer for disclosure purposes only.
  • Ineligible ITC is not filed in GSTR-3B. 
  • One of the reasons for this is that the ineligible ITC will be combined with the related costs and charged to the books as part of the total cost and will not affect the taxpayer’s ITC GL.
  •  Many taxpayers do not provide this information in column 4(D) of GSTR-3B because this information is not available to ineligible ITCs.

Frequently Asked Questions(FAQs):-

What if ITC wrongly claimed?

If you claim an input tax credit wrongly, reverse it by paying this amount in the subsequent month. As soon as the accounting records for that calendar year are close, reverse the incorrect claim for the purchase of goods.

Can ITC be negative?

ITC cannot claim inputs used in such exempted products. This is because it leads to negative taxation.

What if excess ITC is claimed?

If the recipient claims the excess amount, reverse ITC within 180 days of the invoice date.

Can we claim ITC on reverse charge in the same month?

Yes, you can claim the Input Tax Credit on RCM in the same month, when you paid the GST under RCM.

Where is ITC shown on a balance sheet?

Show tax liabilities or positive input tax credits as liabilities or assets on the balance sheet.

Wrapping Up

If you are a registered taxpayer, you can check your input tax credit in the GST portal. If you have GST registration, you can claim an input tax credit (ITC) on your purchases. On the GST portal, you can check whether or not you are eligible for ITC on a particular purchase. If you are eligible, you can claim the credit by entering the relevant information into the GST portal.

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