Section-16. Eligibility and conditions for taking input tax credit
(1) Every registered taxable person
shall, subject to such conditions and restrictions
as may be prescribed and within the
time and manner specified in section 44, be
entitled to take credit of input tax
charged on any supply of goods or services to
him which are used or intended to be
used in the course or furtherance of his
business and the said amount shall be
credited to the electronic credit ledger of
such person:
PROVIDED that credit of input tax in
respect of pipelines and telecommunication
tower fixed to earth by foundation or
structural support including foundation and
structural support thereto shall not
exceed—
(a) one-third of the total input tax
in the financial year in which the said goods
are received,
(b) two-third of the total input tax,
including the credit availed in the first
financial year, in the financial year
immediately succeeding the year referred
to in clause (a) in which the said
goods are received, and
(c) the balance of the amount of credit in any subsequent financial
year.
(2) Notwithstanding anything
contained in this section, but subject to the provisions
of section 36, no registered taxable
person shall be entitled to the credit of any
input tax in respect of any supply of
goods and/or services to him unless,-
(a) he is in possession of a tax
invoice or debit note issued by a supplier
registered under this Act, or such
other taxpaying document(s) as may be
prescribed;
(b) he has received the goods and/or
services;
(c) the tax charged in respect of
such supply has been actually paid to the
account of the appropriate
Government, either in cash or through utilization
of input tax credit admissible in
respect of the said supply; and
(d) he has furnished the return under
section 34:
PROVIDED that where the goods against
an invoice are received in lots or
installments, the registered taxable
person shall be entitled to take credit upon
receipt of the last lot or
installment:
PROVIDED FURTHER that where a
recipient fails to pay to the supplier of services,
the amount towards the value of
supply of services along with tax payable thereon
within a period of three months from
the date of issue of invoice by the supplier, an
amount equal to the input tax credit
availed by the recipient shall be added to his
output tax liability, along with
interest thereon, in the manner as may be prescribed.
Explanation.—For the purpose of clause (b), it shall be deemed that
the taxable
person has received the goods where
the goods are delivered by the supplier to a
recipient or any other person on the
direction of such taxable person, whether acting
as an agent or otherwise, before or
during movement of goods, either by way of
transfer of documents of title to
goods or otherwise.
(3) Where the registered taxable
person has claimed depreciation on the tax
component of the cost of capital
goods under the provisions of the Income Tax
Act, 1961(43 of 1961), the input tax
credit shall not be allowed on the said tax
component.
(4) A taxable person shall not be
entitled to take input tax credit in respect of any
invoice or debit note for supply of
goods or services after furnishing of the return
under section 34 for the month of
September following the end of financial year
to which such invoice or invoice
relating to such debit note pertains or furnishing
of the relevant annual return, whichever is earlier.
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