Claiming ITC in India? Confirm, your supplier registered with GST


Liability of GST returns filing is pressurised by Recipient who eligible for ITC

Claiming ITC in India Confirm, your supplier registered with GSTCollect Supplier’s GST registration number before placing order


As you know, GST payment structure is something like a double entry book keeping system except the value of goods. Almost all transactions have two entries. Means, if you dispatch goods, there should be arrival of goods with the e-ledger of GST Department. So an entry on dispatch of goods and an entry on arrival of goods has to be reflected in the GST ledger. However, the value of transaction is varied from one to another, the consignment details has to be tallied.


If you would need to claim input tax credit against the GST paid by you in India, you must ensure that you have purchased inputs from GST registered supplier and such registered GST supplier must file GST returns after paying Tax if applicable.


I remember, when I had approached to claim my Provident Fund when I have resigned from an Export Firm, the PF officer in charge verified my PF ledger and informed me a shortage of amount than my books of records. He cross verified and reconfirmed me that last two months’ PF contribution of employer has not been either paid or not accounted at PF Department. This means, PF department can pay me my full eligible amount only after reflecting my eligible amount in their books of records or I have to satisfy with short fall of last two months’ contribution.


Here, I compare the above example with the claim of Input Tax Credit of GST. If you approach the GST authorities to claim your Input Tax Credit, the GST authorities verify your e-ledger and confirms, all your eligible amount has been accounted with the GST tax returns of your supplier electronically. The said E-ledger can be viewed by you also at any time, if you have your own arrangements of GST tax return filing electronically.


In short, you can claim Input Tax Credit under GST if your eligible amount has been reflected in your GST e-ledger which happens only after filing GST returns by your supplier against such transactions. That means, the liability of GST tax payment and returns filing of supplier is pressurised by the recipient of Goods and Services who is eligible for ITC.


Suppose X supplied goods or invoiced to Y. Here, an entry of dispatch by X is reflected in the GST return filing e-book of X. In turn, when goods received, an entry of receipt of such goods are mentioned and reflected in GST return of Y. So, if any input tax credit is eligible from this transaction from X, such amount is verified with the GST e-ledger of X which is also reflected electronically in the e-ledger of Y.


So, always, when GST is paid and a claim of input tax credit is eligible on such transaction, the supplier’s GST e-ledger details also has to be tallied with the recipient’s e-ledger. If the supplier does not file GST returns, the amount of such input tax credit cannot be claimed by recipient of goods or services.


In short, always reconfirm, your supplier has already registered with GST and collect supplier’s GST registration number before placing order and confirm your supplier files GST returns punctually, if you claim Input Tax Credit of GST in India.



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