Input Tax Credit in GST

GST Form ITC-01 is a declaration form used to submit an input tax credit request.

When a taxpayer claims an input tax credit, it implies they are able to deduct from the amount of GST they have already paid—which was obtained from customers—when submitting their GST payment to the government.

This article will guide you through all the information regarding the input tax credit under the GST.

Without further ad, let’s start.

Table of Contents

What is ITC in GST with example?

ITC or Input Tax Credit means that when a person purchases goods or services, they are liable for tax, which they can deduct from their tax bill.

In other words, the tax reduction from output tax payable on sales is an input tax credit.

Example:

You purchase goods worth of ₹ 2000 and the tax on them is 10%, which is 200. Now you sold the goods for ₹ 3000 and collected tax of ₹ 300.

Therefore, the Input Tax Credit will be ₹ 100 (300 – 200).

What is ITC 3 in GST?

ITC 03 form is the form that you must pay an amount through an electronic credit or cash ledger equal to the ITC.

Payments made to ITC on the following accounts:

Input in stock
The input is used to create finished goods or semi-finished goods that are held in stock.
Capital goods held in stock

How do I check my GST on ITC?

Follow the steps below to check your GST ITC.

1: Visit the official GST website and log in to your account.

2: Navigate to Services > Ledgers > Electronic Credit Ledger.

3: Now, on the Electronic Credit Ledger page, you can see the input tax credit as of today’s date.

4: Tap on the Electronic Credit Ledger option to see further details. Choose the From and To periods for which you want to view the transactions in the electronic credit ledger. Tap on the GO button.

5: Next, you can click on Provisional Credit Balance to see the details of the provisional credit amounts.

6: Click on Blocked Credit Balance to view the blocked amount by the jurisdictional tax officer.

In which cases is ITC not available?

Here is the list of places where the ITC is not available in GST:

SL No.	Items	Exceptions
1	Motor Vehicles	Extended supply of such vehicles or conveyances Passenger transportation
2	Other Conveyances	Giving training on driving and navigating such vehicles Material transportation conveyances Motor vehicles used for business purposes are approved for the transportation of more than thirteen people, including the driver. Buses for employee pick-up and drop-off (if permitted capacity is more than 13 persons including driver)
3	Foods, Outdoor Catering, Beauty Treatment, Health Services Cosmetics, Plastic Surgery	Except in cases where a registered person uses an inward supply of goods or services or both from a specific category to make an outward taxable supply of the same category of goods or services or both, or as a component of a taxable composite or mixed supply. ITC is available in respect of food and drink or medical services when the provision of such products or services to employees is required of an employer by any law now in force.
4	Insurance, repairs, and maintenance for motor vehicles and conveyance are not allowed	If ITC on vehicles is permitted, only under this heading is it allowed; If the ITC for any kind of vehicle is prohibited, then the cost of insurance, repairs, and maintenance for such vehicles is also prohibited.
5	Membership of a Club,	–
6	Membership in a Health Centre	–
7	Membership in a Fitness Centre;	–
8	Rent-a-cab, Life Insurance, Health Insurance	The government outlines the services that are allotted to employees by employers under any currently in effect laws; or In order to make an outward taxable supply of the same category of goods or services or both, or as a part of a taxable composite or mixed supply, a registered person uses such an inward supply of goods or services or both from a particular category.
9	Travel benefits extended to employees on vacation such as leave
10	Travel benefits on home travel concession (LTA)
11	Works contract services when supplied for construction of immovable property	Except for instances where it is an input service for an extended supply of works contract service and equipment,
12	Goods or services or both received by a taxable person for construction of an immovable property	Except goods or services received on his own account, including when such goods or services or both are used in the course or furtherance of business and plant and machinery
13	Goods or services or both on which tax has been paid under section 10	Under section 10 composition scheme
14	Goods or services or both received by a non-resident taxable person	Except on goods imported by him
15	Goods or services or both used for personal consumption	–
16	Goods lost, goods written off, goods destroyed, goods stolen.	–
17	Goods disposed of by way of gift or freesamples	Gifts to employees are exempted from GST up to a value of Rs 50,000 per employee – Schedule I of CGST Act, 2017
18	Any tax paid in accordance with the provisions of sections 74, 129, and 130.	In Fraud, Misstatement

In which cases is ITC not available

When can you claim ITC under GST?

Depending on which date is earlier, the input tax credit may be applied to an invoice, debit note, or credit note.

September of the next fiscal year is the deadline for submitting a GST return.
An annual return submitted for the relevant year (Filing date, not due date)

Frequently Asked Questions(FAQs):-

1. Can we claim ITC on the 5% GST?

ITC claims are allowed only if they appear in GSTR-2B. So, the taxpayers can no longer claim 5% provisional ITC under CGST Rule 36(4) and must ensure every ITC value claimed is reflected in GSTR-2B.

2. Can we claim GST?

Yes, you can claim GST in certain scenarios.

3. What is the total ITC?

The tax that a company pays when making a purchase is utilized to minimize its tax liability later on.

Conclusion

We hope this article on “Input Tax Credit in GST” will be helpful for you. Please let us know in the comment section below if you still have any queries. For more information about GST, visit InstaFiling. We are happy to help you.

Input Tax Credit in GST- InstaFiling