How to claim input credit under GST?

Input Credit Mechanism is available to you when you’re covered under the Goods and Service Tax Act. So, if you’re a registered supplier, manufacturer, aggregator, etc., under GST, then you can claim input credit for tax paid by you on your purchases. Read below to know how to claim input credit under GST.

For claiming input credit under GST –

• You are required to have received the services/goods

• You are required to have a tax invoice (of purchase) or debit note issued by the registered dealer

Note: Where the recipient doesn’t pay the service value or tax within three months of issue of invoice and they have already availed input credit on the basis of the invoice, the said credit will be added to their output tax liability along with interest.

Note: Where goods are received in installments/lots, the credit will be available against the tax invoice upon the last installment/lot receipt

• The tax levied on your purchases has been paid/deposited to the govt. by the supplier via claiming input credit or in cash

• The supplier has filed GST returns

• The invoice has been uploaded in their GSTR-1 by the supplier and it appears in GSTR-2B of the buyer or recipient.

I want you to know that the input credit is ONLY allowed if your supplier has deposited the tax they received from you. So every input credit you’re claiming should be matched as well as validated before it can be claimed. This is why all your suppliers need to be GST compliant if you want to claim input credit on Purchases.

• In cases where tax on purchases is higher than sales tax, you can carry forward or claim a refund.

If the tax on output < tax on inputs = carry forward input tax or claim refund

If tax on inputs < tax on output = pay balance

The government does not pay interest on the input tax balance

You can’t take an input tax credit on purchase invoices that are older than 1 year old only in cases of special circumstances u/s 18 (1). The period is calculated from the tax invoice date.

Input credit can be availed on both services and goods as GST is charged on both services and goods. However, you can avail input credit on goods and services which are on the negative/exempted list).

Input tax credit is allowed on capital goods but it isn’t allowed for services and goods for personal use.

This is all on how to claim input credit under GST.

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I hope I cleared all your doubts regarding how to claim input credit under GST.