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CS Executive · Tax Laws and Practice · Input Tax Credit and Computation of GST Liability

Sharma Traders receives goods against one invoice in three instalments. The first lot arrives in June, the second in July and the last lot in August of the same year. From which point is Sharma Traders entitled to take credit on this invoice, as per the CGST Act, 2017?

Sharma Traders can take credit only on receipt of the last lot or instalment, which is August. The law lays down that for goods received in lots against one invoice, credit is allowed upon receipt of the last lot, not proportionately on earlier lots.

  1. AOn receipt of the first lot, for the tax proportionate to that lot
  2. BOn receipt of the last lot or instalmentCorrect
  3. CAt the end of the month in which the invoice was issued
  4. DOn receipt of the second lot, being the midpoint of delivery

Explanation

The first proviso to section 16(2) says that where goods against an invoice are received in lots or instalments, credit may be taken upon receipt of the last lot or instalment. Taking proportionate credit on the first lot is therefore wrong. Credit is available only from August, when the last lot arrives.

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