(1) Every registered taxable person shall, subject to such conditions and restrictions as may be prescribed and within the time and manner specified in section 35, be entitledto take credit of input tax admissible to him and the said amount shall be credited to the electronic credit ledger of such person.
(2) A person who has applied for registration under the Act within thirty days from thedate on which he becomes liable to registration and has been granted such registrationshall, subject to such conditions and restrictions as may be prescribed, be entitled totake credit of input tax in respect of inputs held in stock and inputs contained in semifinishedor finished goods held in stock on the day immediately preceding the date fromwhich he becomes liable to pay tax under the provisions of this Act.
(2A) A person, who takes registration under sub-section(3) of section 19, shall, subjectto such conditions and restrictions as may be prescribed, be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished orfinished goods held in stock on the day immediately preceding the date of registration.
(3) Where any registered taxable person ceases to pay tax under section 8, he shall,subject to such conditions and restrictions as may be prescribed, be entitled to takecredit of input tax in respect of inputs held in stock and inputs contained in semi-finishedor finished goods held in stock on the day immediately preceding the date from which hebecomes liable to pay tax under section 7.
(3A) A taxable person shall not be entitled to take input tax credit under sub-section (2),(2A) or sub-section (3)in respect of any supply of goods and / or services to him afterthe expiry of one year from the date of issue of tax invoice relating to such supply.
(4) The amount of credit under sub-section (2), (2A) or sub-section (3) shall becalculated in accordance with generally accepted accounting principles in such manner asmay be prescribed.
(5) Where the goods and/or services are used by the registered taxable person partly forthe purpose of any business and partly for other purposes, the amount of credit shall berestricted to so much of the input tax as is attributable to the purposes of his business.
(6) Where the goods and / or services are used by the registered taxable person partlyfor effecting taxable supplies and partly for effecting non-taxable supplies, includingexempt supplies but excluding zero-rated supplies, the amount of credit shall berestricted to so much of the input tax as is attributable to the taxable supplies includingzero-rated supplies.
(7) The Central or a State Government may, by notification issued in this behalf,prescribe the manner in which the credit referred to in sub-sections (5) and (6) abovemay be attributed.
(8) Where there is a change in the constitution of a registered taxable person onaccount of sale, merger, demerger, amalgamation, lease or transfer of the business withthe specific provision for transfer of liabilities, the said registered taxable person shall be allowed to transfer the input tax credit that remains unutilized in its books of accounts tosuch sold, merged, demerged, amalgamated, leased or transferred business in themanner prescribed.
(9) Notwithstanding anything contained in sub-section (1), (2), (2A) or (3) input taxcredit shall not be available in respect of the following:
(a) motor vehicles, except when they are supplied in the usual course of business or areused for providing the following taxable services—
(i) transportation of passengers, or
(ii) transportation of goods, or
(iii) imparting training on motor driving skills;
(b) goods and / or services provided in relation to food and beverages, outdoor catering,beauty treatment, health services, cosmetic and plastic surgery, membership of a club,health and fitness centre, life insurance, health insurance and travel benefits extended toemployees on vacation such as leave or home travel concession, when such goodsand/or services are used primarily for personal use or consumption of any employee;
(c) goods and/or services acquired by the principal in the execution of works contractwhen such contract results in construction of immovable property, other than plant andmachinery;
(d) goods acquired by a principal, the property in which is not transferred (whether asgoods or in some other form) to any other person, which are used in the construction ofimmovable property, other than plant and machinery;
(e) goods and/or services on which tax has been paid under section 8; and
(f) goods and/or services used for private or personal consumption, to the extent theyare so consumed.
(10) Where the registered taxable person has claimed depreciation on the taxcomponent of the cost of capital goods under the provisions of the Income Tax Act,1961, the input tax credit shall not be allowed on the said tax component.
(11) Notwithstanding anything contained in this section, but subject to the provisions of section 28, no registered taxable person shall be entitled to the credit of any input tax in respect of any supply of goods and/or services to him unless
(a) he is in possession of a tax invoice, debit note, supplementary invoice or such other taxpaying document as may be prescribed, issued by a supplier registered under this Act or the IGST Act;
(b) he has received the goods and/or services;
(c) the tax charged in respect of such supply has been actually paid to the credit of the appropriate Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and
(d) he has furnished the return under section 27:
Provided that where the goods against an invoice are received in lots or instalments, the registered taxable person shall be entitled to the credit upon receipt of the last lot or instalment.
Explanation.—For the purpose of clause (b), it shall be deemed that the taxable person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such taxable person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise.
(12) Where any registered taxable person who has availed of input tax credit switches over as a taxable person for paying tax under section 8 or, where the goods and / or services supplied by him become exempt absolutely under section 10, he shall pay an amount, by way of debit in the electronic credit or cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of such switch over or, as the case may be, the date of such exemption: Provided that after payment of such amount, the balance of input tax credit, if any, lying in his electronic credit ledger shall lapse.
(13) The amount payable under sub-section (12) shall be calculated in accordance with generally accepted accounting principles in such manner as may be prescribed.
(14) In case of supply of capital goods on which input tax credit has been taken, the registered taxable person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by the percentage points as may be specified in this behalf or the tax on the transaction value of such capital goods under sub-section (1) of section 15, whichever is higher.
(15) A taxable person shall not be entitled to take input tax credit in respect of any invoice for supply of goods and/or services, after the filing of the return under section 27 for the month of September following the end of financial year to which such invoice pertains or filing of the relevant annual return, whichever is earlier.
(16) Where credit has been taken wrongly, the same shall be recovered from the registered taxable person in the manner as may be prescribed in this behalf.