Input Tax Credit in New GST Returns

Input Tax Credit (ITC) is one of the most important concepts of the GST regime. The new return forms introduce a number of changes to how a taxpayer can claim ITC.

Key principles to claim ITC:

  • Recipient must have received the goods or service
  • Supplier must have paid the tax amount to the government and filed their GST Return

It is the last point that has been a tricky issue. Making sure that the supplier has indeed deposited the tax amount and filed their returns has not been straightforward. In the old return filing system, the presence of Invoice in GSTR 2A and the supplier having filed their GSTR 3B serve to indicate that credit is available to a recipient.

In the new return filing forms, credit is available only against Invoice reported in Supplier's GST ANX 1 and visible in Recipient's ANX 2. In the discussion below, let us consider that we are claiming ITC for our purchase made in the month of April 2020.

Conditions to claim ITC:

  • Is invoice uploaded by supplier before May 10, 2020?
  • Received goods or service before May 20, 2020?
  • Has supplier filed their Feb 2020 and Mar 2020 GST RET-1 Returns?

Recipient can claim ITC only if the answer to all the above questions is Yes. To claim ITC, the Recipient must Accept the invoice in their RET ANX 2.

ITC Requirements