Input Tax Credit, Tax Invoice and E-Way Bills: 25 flashcards
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1. What does Input Tax Credit (ITC) mean?
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Credit of input tax paid on purchases used in the course or furtherance of business.
2. Under which section is ITC defined?
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Section 2(63) of the CGST Act, 2017.
3. What is 'input tax' under Section 2(62)?
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CGST, SGST, IGST or UTGST charged on any supply of goods or services to a registered person; includes IGST on imports and reverse charge tax; excludes composition levy tax.
4. Which chapter of the CGST Act contains the ITC framework?
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Chapter V (Sections 16–21).
5. Who is eligible to claim ITC?
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Only a registered person.
6. List the five conditions under Section 16(2) for claiming ITC.
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1) Possession of tax invoice/debit note/bill of entry/ISD invoice; 2) receipt of goods or services; 3) supplier has filed returns and paid tax; 4) payment to supplier within 180 days; 5) details appear in GSTR-2A/2B.
7. What is the time limit to pay the supplier for ITC eligibility?
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180 days from the invoice date, including the tax component.
8. Which form must invoice details appear in for ITC under Rule 36(2)?
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Form GSTR-2A/2B.
9. Name any four items on which ITC is blocked under Section 17.
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Motor vehicles (unless cargo/training), personal consumption items, club/health membership, works contract for immovable property, construction of immovable property, lost/stolen/gifted goods, composition scheme tax.
10. Under Section 18, when can ITC be claimed on stock held before registration?
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On new registration within 30 days of becoming liable, or on voluntary registration under Section 25(3), on stock and capital goods held the day before.
11. Under Section 19, what is the time limit for return of inputs sent to a job worker?
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Inputs must return within 1 year; capital goods within 3 years.
12. What happens if goods sent to a job worker are not returned in time?
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They are deemed supplied by the principal to the job worker on the day they were originally sent out, triggering tax liability.
13. How does an Input Service Distributor distribute credit under Section 20?
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Attributable to one recipient — entirely to that recipient; to more than one or all — pro rata on turnover of each recipient.
14. State the order of utilization of ITC under Rule 88A.
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IGST credit first against IGST, then CGST/SGST; CGST credit against CGST then IGST; SGST credit against SGST then IGST. CGST cannot be used for SGST and vice versa.
15. What is the deadline to claim ITC under Section 16(4)?
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Earlier of 30 November of the following financial year or the date of filing the annual return.
16. What is Form GST ASMT-10?
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A notice issued by an officer for discrepancies in ITC, stating observations, time limit to respond, and the mismatched amount.
17. What is reversal of ITC?
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Returning credit that was claimed but no longer qualifies — e.g., non-payment within 180 days (Rule 37), exempt supplies (Rule 42), capital goods partly for exempt supplies (Rule 43), or cancellation/composition (Rule 44).
18. What is reclaim of ITC?
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Recovering reversed credit once the defect is cured — e.g., supplier files correct return or eligibility is proven.
19. What are the benefits of ITC?
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Avoids cascading effect, reduces tax liability, promotes compliance and transparency, minimizes evasion, improves cash flows.
20. What is the Electronic Credit Ledger used for?
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Holding ITC, which can only be used to pay taxes, not withdrawn as cash.
21. What is matching in the ITC context?
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Comparing ITC claimed with the outward supplies the supplier reported in GSTR-2A/2B.
22. Which credit is described as 'flexible' in utilization?
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IGST credit — it can be set off against IGST, CGST and SGST.
23. Which credits are ring-fenced from each other?
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CGST and SGST — CGST cannot pay SGST liability and vice versa.
24. What is the core promise of GST that ITC delivers?
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Tax only the value addition, not the entire supply chain.
25. What is the procedure to claim ITC in practice?
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File GSTR-3B, verify with GSTR-2B, match invoice-wise, follow up with suppliers, reconcile, reverse excess claims.
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