Subject to following conditions every registered person shall be entitled to take credit of input tax and such input tax shall be credited to the electronic credit ledger of such person:
i. Tax has been charged on supply of goods and/or services to the registered person taking credit and which are used or intended to be used in the course or furtherance of his business.
ii. Person taking credit should be in possession of tax invoice or debit note issued by the supplier registered under CGST/SGST/UTGST/ IGST Act. The ITC rules provide for the documents on the basis of which ITC can be availed:
a. an invoice issued by the supplier of goods or services or both in accordance with the provisions of section 31;
b. a debit note issued by a supplier in accordance with the provisions of section 34;
c. a bill of entry or any similar document prescribed under the Customs Act, 1962.
d. an invoice issued in accordance with the provisions of clause (f) of sub-section (3) of section 31, i.e. tax paid under reverse charge under section 9(3) or 9(4) of the CGST Act.
e. a document issued by an Input Service Distributor in accordance with the provisions of sub-rule (1) of rule 7 of tax invoice.
iii. Person taking credit has received goods and/or services. It shall be deemed that the taxable person has received the goods where goods are delivered by the supplier to a recipient or any other person on the direction of such taxable person, whether acting as a agent or otherwise, before or during the movement of goods, either by way of transfer of documents of title to goods or otherwise.
iv. Subject to provisions of provisional acceptance of eligible input tax credit as per section 41 of the CGST Act, the tax charged in respect of such supply has been actually paid to the account of appropriate Government, either cash or through utilization of input tax credit admissible in respect of such supply.
v. Person claiming the ITC has furnished the return.
vi. Where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment.
vii. Full credit on capital goods will be allowed in the year of purchase itself.