Section 16 of CGST Act, 2017 : Section 16: Eligibility And Conditions For Taking Input Tax Credit

Explanation using Example

Imagine a scenario where Mr. A owns a business registered under GST. He purchases raw materials from Supplier B, who is also registered under GST. Mr. A receives an invoice from Supplier B, which includes GST on the raw materials. Mr. A uses these raw materials to manufacture goods which he later sells.

Under Section 16(1) of the CGST Act, Mr. A can claim input tax credit (ITC) for the GST paid on these raw materials since they are used in the course of his business. He can credit this amount to his electronic credit ledger, which can be used to offset against his output tax liability.

However, to claim this ITC, Mr. A must ensure that:

• He has a v...

Login to access all pages and read more content.

To disable ads and read rest of the premium content, subscribe to KanoonGPT Pro.