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CMA Intermediate · Direct and Indirect Taxation · Input Tax Credit

Under the CGST Act, 2017, a registered manufacturer receives goods against a single tax invoice in three lots over two months. From which point is the manufacturer entitled to take input tax credit on that invoice?

Credit is available only on receipt of the last lot. Where goods against one invoice arrive in lots or instalments, the registered person is entitled to take input tax credit upon receipt of the last lot or instalment, not earlier on invoice date or first lot.

  1. AOn the date the tax invoice is issued by the supplier
  2. BOn receipt of the first lot
  3. COn receipt of the last lotCorrect
  4. DOn payment to the supplier of the first instalment

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 credit on the first lot or on the invoice date is premature.

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