Page 4 - Chap7 ITC

01: Sec 16: Eligibility & Conditions for taking ITC

Q.1
Rimjhim Sales, a registered supplier, receives 100 invoices (for inward supply of goods/ services)
involving GST of ₹ 10 lakh, from various suppliers during the month of January, 20XX. Out of 100 invoices,
details of 80 invoices involving GST of ₹ 6 lakh have been furnished by the suppliers in their respective
GSTR-1s filed on the prescribed due date therefor and such details have also been duly communicated to the
recipients of such invoices in Form GSTR-2B.
Compute the ITC that can be claimed by Rimjhim Sales in its GSTR-3B for the month of January, 20XX to
be filed by 20th February assuming that GST of ₹ 10 lakh is otherwise eligible for ITC.
Answer: Legal Provision:
Ü As per Section 16(2)(a) of the CGST Act, ITC can be claimed only if the taxpayer possesses a valid tax invoice.
Ü Section 16(2)(aa) and Rule 36(4) mandate that ITC is available only if the supplier furnishes invoice details in
GSTR-1/GSTR-1A and they are reflected in GSTR-2B.
Ü Full ITC is allowed for invoices uploaded by the supplier, but ITC is not available for 20 invoices not
reported in GSTR-1.
Discussion & Conclusion : Computation of ITC that can be claimed by Rimjhim sales in its GSTR-3B for the
month of January 20XX
Amount of ITC involved Amount of ITC that can be
Invoices
in the invoices (₹ in Lakhs) availed (₹ in Lakhs)
80 invoices furnished in GSTR-1 6 6 (Note-1)
20 invoices not furnished in GSTR-1 4 Nil (Note -2)
Total 10 6
Notes: 1) Full ITC can be availed on the invoices uploaded by the supplier in their GSTR 1 & GSTR 1A u/s 16(2)(aa)
read with rule 36(4).
2) ITC is available only if the supplier files invoice details in GSTR-1/GSTR-1A and they are communicated to the
recipient u/s 37. So, no ITC is allowed for 20 invoices not shown in GSTR-1.

Quick Review Points :- ITC available only when furnished in GSTR 1/ 1A and reflected in 2B

Q.2
A registered supplier of taxable goods supplied goods valued at ₹ 2,24,000 (inclusive of CGST ₹ 12,000
and SGST ₹ 12,000) to Mohan Ltd. under forward charge on 15th August for which tax invoice was also
issued on the same date. The inputs were received by Mohan Ltd. on 15th August. Mohan Ltd. availed credit
of ₹ 24,000 on 20th September by filing Form GSTR-3B for August month. However, Mohan Ltd. did not
make any payment towards such supply along with tax thereon to the supplier. Is Mohan Ltd. eligible to avail
ITC on such supply? Discuss ITC provisions if Mohan Ltd. makes the payment of ₹ 2,24,000 to the supplier
on 18th March of next calendar year. [Study Mat]
Answer: Legal Provision:
Ü As per Section 16 of the CGST Act, a registered person can avail ITC on tax paid for inputs based on a valid
invoice, subject to conditions.
Ü Proviso to Section 16(2) read with Rule 37 requires the recipient to pay the invoice amount along with tax
within 180 days; failing which, the availed ITC is added to output tax liability with 18% interest.
Ü If only partial payment is made, ITC is available proportionately, and full tax cannot be adjusted against part
payment.
Conclusion:
Ü Mohan Ltd. must reverse ₹ 24,000 ITC with interest if payment is not made within 180 days.
Ü If payment of ₹ 2,24,000 is made after 180 days, ITC of ₹24,000 can be reclaimed in GSTR-3B for March.

Quick Review Points:- Payment to supplier to be made within 180 days. If not, then ITC to be reversed and
it can be reclaimed once the payment is done

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