Know All About GST input tax credit rules 2021

GST Input Tax Credit Rules, Amendments, and process

Input tax credit refers to the tax that has been paid by the user while purchasing specific goods and those amount lines or credits are available as a deduction from the payable tax. This mechanism for GST input Tax is available for all the people registered under GST and are subjected to claim input credit for tax paid on purchases of all kinds.

Input tax credit is the backbone of GST. GST is very important to streamline the seamless flow of credit and ensure no issues under ITC making GST a good, transparent, and simple tax. The Input tax credit is a simple process and there are certain conditions that are to be followed to be eligible to file the former. The most important condition being a registered taxable person. This is applicable only for purchases made for business purposes and not for individual use. By following the latest Credit Rule 2021, we can get the GST input tax credit claimed correctly.

The process and rules for GST input tax credit

There is a special need of following the rules for filing input tax credit and if a product is purchased by a trader worth ten thousand rupees, and has paid a total tax of ten percent on the product. After the purchase is made, the user sells the product at twelve thousand rupees and collects a tax of twelve hundred rupees from the buyer.

Now since the buyer is liable for a tax of twelve hundred rupees to the government, but while making the purchase, he has already paid ten percent of the price that is, one thousand rupees to the government, this amount paid at the time of purchase becomes the input tax credit of the user and will be allowed as a deduction from payable tax and the net amount to be paid is the difference between the tax paid at purchase time and tax paid by the user at the time of sale. Every person who is registered under GST is eligible for Input tax credit and has to work as per GST input tax credit rules 2021.

How can you claim input credit under GST?

If you have a tax invoice or debit note issued by a registered detailer and have received the goods/ services in lots or installments, a credit will be available against the tax invoice. It is very important that you need claim input credit on purchases and all your suppliers must be GST compliant as well and follow the new rules 2021 for GST input Tax.

There are some documents that are required to claim input credit under GST:

• The invoice was issued by the supplier.
• The invoice issued is similar to the Bill of Supply, in cases where the total amount is less than INR 200.
• If there is any debit note issued by the supplier, that is also required.
• Documents issued by the Customs department like Bill of Entry.
• Any other credit or debit note
• Bill of Supply issued

GST Input Tax Credit and the latest amendments

• In GST, there are different types of taxes that can be divided on the basis of their usage and applications. Different types of GST are CGST, IGST, SGST. GST rules are revised every now and then so as to stay updated with the changing financial decisions and changes in government. GST plays a major role in the economy and it becomes important to maintain the balance of the governmental policies and follow new rules 2021 for GST input Tax.
• There were major changes made in 2021 that have led to various effects on the overall economic stability of the government. As per the latest amendment in May 2021, The CGST rule 36 (4) that restricted provisional ITC claims to 5% of GSTR-2B in GSTR-3B is relaxed from April 2021. According to the recently implemented budget for 2021, Section 21 will allow taxpayer's claim of the input as tax credit based on GSTR-2A and GSTR-2B.
• Also, the input tax credit note on any invoice or debit note can be availed only when the details of such invoices or debit notes have been issued by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or credit note. There were some minor changes that were implemented from 1st January 2021. The ITC should be uploaded by respective suppliers through GSTR-1 or through IFF Invoice Furnishing Facility under new rules 2021 for GST input Tax.

The most recent updates on Input Tax Credit and GST input tax credit rules 2021

• Starting January 2021, the provisional credit is restricted to 5%.
• As per the 2021 Rule for GST, 86B under GST, if the value of taxable supply is more than 50 lakhs in a month, then the registered taxpayer will not be allowed to use the available credit amount to discharge his output tax if it exceeds 99% of tax liability.
• From 2021, ITC will get auto-populated from GSTR 1 through GSTR 2B. This came into effect for monthly filers from 1 January 2020 and for quarterly filers from 1 April 2020.
• To enable auto credit of tax liability and ITC, Form GSTR 1 is mandatory to be filed before GSTR 3B under the new rules 2021 for GST input Tax.

The latest amendments in GST filing to Input Credit are important and these rules are implemented on the official websites. All the filings are done on the basis of the latest rules shared by the authorities and if you want to know more about the process, you can get the details online or contact a CA. If you want to get the right information on GST input tax credit rules 2021, visit academy.tax4wealth today!