GST · Provision
Invoice, receipt, the supplier's filing, tax actually paid and your own return: the conditions for ITC, the 180-day payment rule, and the section 16(4) cut-off of 30 November. (Section 16, Central Goods and Services Tax Act, 2017.) In force since 1 July 2017 · Text checked against India Code on 25 October 2026.
Quick Statutory Answer
Under Section 16 of the CGST Act, 2017, a registered person may take input tax credit on supplies used in the course or furtherance of business only if they hold a tax invoice or debit note; the supplier has reported it in GSTR-1 and it has been communicated to them; the goods or services have been received; the credit is not restricted under section 38; the supplier has actually paid the tax; and they have filed their own return. Credit is paid back with interest if the supplier is not paid within 180 days of the invoice. Under section 16(4), credit for a financial year must be taken by 30 November of the following year, or by the date the annual return is filed if that is earlier: for FY 2025-26, 30 November 2026.
16. Eligibility and conditions for taking input tax credit.— (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,— (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37; (b) he has received the goods or services or both. Explanation.— For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services— (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered 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; (ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person; (ba) the details of input tax credit in respect of the said supply communicated to such registered person under section 38 has not been restricted; (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that 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: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be paid by him along with interest payable under section 50, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him to the supplier of the amount towards the value of supply of goods or services or both along with tax payable thereon. (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax component shall not be allowed. (4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier: Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019. (5) Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed up to the thirtieth day of November, 2021. (6) Where registration of a registered person is cancelled under section 29 and subsequently the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or court and where availment of input tax credit in respect of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under section 39,— (i) filed up to thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or (ii) for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, where such return is filed within thirty days from the date of order of revocation of cancellation of registration, whichever is later.
| Requirement | What it means in practice | Provision |
|---|---|---|
| Tax invoice or debit note | You hold the supplier's invoice or debit note | s.16(2)(a) |
| Supplier has reported it | It is in the supplier's GSTR-1 and has been communicated to you | s.16(2)(aa) |
| Goods or services received | Delivered to you, or to someone on your direction (bill-to-ship-to) | s.16(2)(b) |
| Credit not restricted | Not blocked in the details communicated under section 38 | s.16(2)(ba) |
| Tax actually paid by the supplier | The supplier has paid the tax to the Government | s.16(2)(c) |
| Your own return filed | Your return under section 39 (GSTR-3B) | s.16(2)(d) |
| Pay the supplier within 180 days | Otherwise the credit is paid back with interest, and taken again when you pay | Second and third provisos to s.16(2) |
| Time limit | 30 November after the year ends, or the annual return if filed earlier: 30 November 2026 for FY 2025-26 | s.16(4) |
| Depreciation on the tax component | No credit on GST you capitalised and depreciated | s.16(3) |
Take it by 30 Nov 2026. After that, section 16(4) bars the credit for good, unless section 16(6) applies after a cancellation is revoked.
Under section 16(4) of the CGST Act, 30 November 2026, or the date you file your annual return for 2025-26 if that is earlier. After that, no credit can be taken on invoices or debit notes for that year.
Section 16(2) requires a tax invoice or debit note; the supplier to have furnished it in GSTR-1 and it to have been communicated to you; receipt of the goods or services; no restriction under section 38; actual payment of the tax by the supplier; and your own return under section 39.
If you do not pay the supplier the value of the supply and the tax within 180 days of the invoice date, an amount equal to the credit you took is paid back with interest under section 50. You can take it again when you pay, under the second and third provisos to section 16(2). Supplies taxed under reverse charge are outside the rule.
Not under section 16(2)(c), which makes actual payment of the tax to the Government a condition of the credit.
The time limit for taking input tax credit: no credit on an invoice or debit note after 30 November following the end of the financial year it relates to, or after the relevant annual return is furnished, whichever is earlier.
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