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Challenges in Claiming Input Tax Credit under GST

Challenges in Claiming Input Tax Credit under GST

The government released the revised version of Model GST law on November 26, 2016. With the roll out of GST, the government is trying to bring the simplified and easier indirect tax reform. Though, we should not forget that every rose has thorns and there are two sides of every coin. This statement holds valid in GST transformation too. Some of the provisions of the model law are challenging especially the concept of Input Tax credit, which will get completely changed.

The present system of credit availment is a part of self-assessment scheme. But what has been proposed by Model law is the electronic matching of input credit with details of supplier, invoice, and Item HSN code. In a country like India, where the majority of the population strives for computer education and digitalization is an upcoming concept, electronic matching seems to be a task.

Some of the basic conditions for credit availment under section 16(2) of the GST law are:

  • The recipient should have Tax invoice or debit note given by the supplier who is duly registered under GST act.
  • The goods or services must have been received by the recipient.
  • The payment for the tax charged with respect to the supply transaction has been actually made to the government either in cash or as applicable.
  • The prescribed returns u/s 34 has been duly filed.

Some of the other practical scenarios where claiming credit will have complications are:

  • Goods supplied on credit on advance payment.
  • Credit on receipt of last lot of goods
  • Payment to the upplier of services within the three months – second proviso to Section 16(2) of the act.
  • Usage of capital goods partly for taxable supply and partly for exempted supplies
  • Vendor and sub-vendor of your vendor must pay tax
  • GST of different states

In our upcoming articles, we will be discussing such issues on Input tax credit in detail. Stay in touch for further updates.


  • S.M Posted April 18, 2017 6:33 pm Reply

    Great article.. Beautifully explained..

  • Anonymous Posted April 18, 2017 6:35 pm Reply

    Very good.. Nicely elaborated.. Look forward to more articles on this.

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