Additional restrictions for claiming input tax credit

 Additional restrictions for claiming input tax credit

Under the GST, input tax credit would be available to the buyer only if the counter party supplier has paid tax to the appropriate government and has filed its valid returns. It means that if a supplier does not deposit his GST liability, all of his counterparty recipients would not receive the credits of ITC, even if they have paid the entire consideration to the supplier. These provisions require chasing by the recipients of the suppliers to deposit tax liability on or before the due date.

Therefore, efforts should be started right now to identify such dealers who are generally tax defaulters. Taxpayers might have to change their business model by keeping security deposit or indemnity bound from such suppliers till the date these suppliers file their valid return.