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If a business is inactive or doesn't generate the required amount of revenue, the GST registration may be voluntarily terminated. Additionally, a GST officer has the authority to revoke a business's GST registration if it is not GST compliant. Once the GST registration has been cancelled, the person or organization is no longer required to submit GST returns or pay or collect GST.

Voluntary GST Cancellation

If a person or organization that has registered for GST wants to terminate their registration, they must file a cancellation request in Form GST REG-16 to the GST Department. The GST Officer will issue an order to terminate GST registration in Form GST REG-19 if, after evaluating the application, he or she is satisfied.

Some of the main explanations for voluntarily cancelling a GST registration include the following:

  • Closure or discontinuance of an enterprise.

  • Business transfers, groupings, mergers, de-mergers, leases, and other relevant factors.

  • Changes to a company's organizational structure that alter PAN.

  • The reduction in revenue brings it below the GST registration level.

  • Death of the single proprietor.

The business owner can avoid extra inconveniences like monthly GST return filing and late-filing fines by voluntarily cancelling their GST registration.

Cancellation by GST Officer

In accordance with GST, an officer may start the cancellation of a GST registration if the officer has a valid reason to do so. By sending out a show-cause notice in Form GST REG-17, the procedures for GST Cancellation by Officer would get started.

If any of the following circumstances take place, a GST officer may begin the cancellation procedure.

  • If a taxpayer has repeatedly neglected to submit GST filings.

  • An assesse voluntarily enrolled for GST but did not open for business within six months.

  • One or more provisions of the GST Act or its Rules have been broken by the registered taxpayer.

  • Deception or wilful misrepresentation is used to obtain the GST registration.

  • If a taxpayer generates an invoice without providing any goods or services, they can claim an input tax credit for doing so.

Procedure for GST Registration Cancellation

Taxpayers can cancel their GST registration online with the aid of Account kart. The taxpayer is required to file any past-due GST returns before starting the process. The late return must be filed before the GST cancellation procedure can start if there is non-compliance with the GSTR-3B, GSTR-1, or GST annual return.

Step 1: On the common GST portal, file a Form GST REG-16 request for a GST cancellation. The application for GST cancellation must contain the following details.

  • Email and a mobile number are included in the contact information.

  • Cause of cancellation

  • The cancellation date that you want.

  • Specifics of the price and tax due on the stock of inputs, the stock of inputs available in completed goods, semi-finished goods, and capital goods/plant and machinery.

  • Along with the ARN of the specific return, the taxpayer files information from the most recent GST return.

Step 2: The GST Officer must assess the application and, within 30 days of the application's date, issue an order cancellation in the Form GST REG-19. The Officer will inform the taxable individual of the cancellation, which will take effect on a date of his choosing.

If you want to cancel a GST registration, speak with an Account kart GST Expert. We'll verify whether you’re GST returns have been filed, help you submit any unfinished GST filings, and apply for GST cancellation.

In addition, when you have submitted your application, we will keep an eye on it, respond to any inquiries, and help you finish the procedure.

Final Return

In the event that a person or business' GST registration is cancelled, they are required to submit a final GST return on Form GSTR-10 within three months of the cancellation date, which is the earlier of the cancellation order's date or the cancellation date.

This is carried out to ensure that the taxpayer has no unpaid GST obligations. Input service distributors and non-resident taxpayers who are required to pay tax under Sections 10, 51, or 52 are exempt from this provision.

A notification in Form GSTR-3A will be sent to the taxpayer if the final GST return is not submitted in Form GSTR-10 and instructing them to do so within 15 days of the notice's issuance.

The concerned Officer will take action to ascertain the taxpayer's liabilities if the taxpayer chooses to disregard the notice. In the event that the applicant submits the return within 30 days of receiving the notice, the assessment order will be revoked.

Preparing to Cancel GST Registration

The applicant must settle any past-due GST liabilities before beginning the cancellation of GST process. In addition, the taxpayer is required to pay the greater of the input tax in the stock of inputs, semi-finished goods, finished goods, and capital goods, or the output tax liability of such goods.

If the GST registration is revoked, the taxpayer will no longer be qualified to claim ITC, so the input tax credit on the present stock must be reimbursed.

To make the final GST payment, you can use a cash ledger or a GST electronic credit. When filing the final GSTR-10 return, the final payment may be paid concurrently.

Rejection of application for GST cancellation

For the reasons listed below, the relevant Officer may choose in some cases to decline the application.

  • The application you submitted isn't complete.

  • The new entity has not registered with the tax authority prior to applying in the transfer, merger, or amalgamation of businesses.

The responsible Officer notifies the applicant in writing of the nature of the disagreement in such cases. Within seven days of the letter's receipt, the applicant must reply to the same. If the applicant doesn't comply, he may reject the application after giving the applicant a chance to be heard.

Revocation of GST Cancellation

  • A GST cancellation that has been revoked indicates that the cancellation call has been reversed and also the registration continues to be in result. This solely holds true once a tax official decides to cancel a ratable person's registration. A payer has thirty days from the date they receive the cancellation order to request the revocation of the order. The steps to file for the cancellation of the GST area unit as follows: • Within thirty days of the cancellation order, a type GST REG-21 application for revocation of cancellation is also submitted if a registered person's registration has been off Suo-moto by the suitable Officer. • Within thirty days of receiving the applying, the GST Officer could, if happy, reverse the cancellation of registration by provision associate order in type GST REG-22. Revocation or cancellation of registration should have a written justification. • The Officer could to boot issue associate order in type GST REG-05 denying the revocation application and notifying the human. However, the Officer should 1st issue the human a show-cause notice in GST REG-23 asking them to produce justification for the application's approval before rejecting it. The human should reply in type GST REG-24 among seven business days of receiving the notice. Once receiving the applicant's clarification in type GST REG-24, the suitable officer can create a choice among thirty days. Benefits of Voluntary GST Cancellation • The method for GST cancellation should be started by the payer if no enterprise takes place once getting GST registration. A payer cannot apply for a brand new GST registration with a similar PAN if he stops filing GST returns and lets his existing GST registration lapse. • Additionally, if the govt. terminates a GST registration, the ratable person is needed to 1st apply to possess the termination reversed by paying any late fees. If necessary, cancel the GST once the restoration or keep submitting GST reports. • Due to the current, the payer is needed to observe compliance once receiving a GST registration. Apply for the cancellation of the GST registration as before long as possible if there's no enterprise.

Documents Required For GST Registration Cancellation

PAN Card

PAN Card of the authorized signatory.

Aadhar Card

Aadhar Card of the authorized signatory.

Last return Details

Details of the last Income Tax return filed by the taxpayer

Company Authority Details

When an existing company is merged, demerged or transferred.

Tax Particulars

Tax is payable on Input of stock or capital and input available on goods

GST Registration Cancellation FAQ's

1. How long does it take to register under the GST?

An entity that is required to register for GST must submit an application within 30 days of the date that the entity first becomes subject to GST. Prior to starting their businesses, casual taxpayers and non-resident taxpayers must register with the GST.

2. Can a company operate all over India using a single GST number?

No. For each state where a taxable supply of goods or services is produced, an entity that operates in multiple states must register separately.

3. Can organizations with a single VAT or service tax register for a new GST?

The steps for converting an existing service tax, VAT, or central excise to GST are outlined in the GST portal. To get GST, entities registered under the previous tax rules must complete the mandatory GST migration process.

4. Can I voluntarily register for GST?

Yes. Even if they are not required to be registered, any organization that wants to claim an input tax credit can do so voluntarily. Following registration, voluntary registered entities must follow the same rules as apply to regular taxable persons.

5. Is PAN a requirement to register for GST?

Yes. For regular taxpayers and sporadic taxpayers to register under GST, a PAN is required. However, a non-resident taxable person is not required to have a PAN in order to register.

6. What is the GST certificate's expiration date?

Upon issuance of the GST certificate, the registration is valid until it is given up, revoked, or suspended. There is a validity period only for GST certificates granted to non-resident taxable people and occasional taxable persons.

7. Is it legal for an unregistered company to charge customers with GST?

No, a non-registered individual without a GSTIN is unable to charge clients for GST or receive an input tax credit for GST paid.

8. How much time does it take to get a GSTIN?

Within seven working days of the GST application being submitted with all necessary supporting documentation, a GSTIN is assigned.

9. What does total turnover mean?

A person with the same PAN's aggregate turnover is the total value of all of their taxable supplies, exempt supplies, exports of goods or services, or both, and interstate supplies. The CGST, SGST, IGST, and GST cess are excluded from the total turnover.

10. Where can I obtain a GST certificate?

Only digital copies of the GST certificate are made available by the government. The taxpayer may download the GST certificate whenever they choose from the GST Portal after receiving their GSTIN.

11. From whom shall the tax payer acquire registration?

Every State from which a taxable supply of commodities, services, or both is made requires businesses and other entities that supply products or services to register for GST.

12. Who is the principal signing with authority?

The person who is principally responsible for carrying out an activity on the GST System Portal on behalf of the taxpayer is the primary authorized signatory. It may be the business promoter or another individual that the business promoters nominate.

13. Who has the principal power of attorney?

The person in charge of performing an activity on the GST System Portal on behalf of the taxpayer is known as the principal authorized signatory. It can be the business promoter or any other person put forward by the business promoters.

14. After being cancelled, may a firm apply for GST?

Yes, a GST registration can be obtained following a properly executed voluntary cancellation by the taxpayer. A GST registration may not be given again if an officer cancels it.

15. Is a single GST number sufficient for a company to operate throughout India?

No, a business that operates in many states must register separately in each state where a taxable supply of goods or services is made.

16. Am I able to voluntarily cancel my GST registration?

Yes, by following the GST cancellation process, any individual or company with a GST registration may give up their registration.

E -way bills: what are they?

  • Electronic Way Bill is referred to as e-way bill. An electronic waybill for goods is known as a Commodities and Service Tax (GST) E-way bill. The GST Portal must be used to create an E-way bill for any GST-registered taxable person transporting goods worth more than Rs. 50,000.

  • E-Way Bills can be created and distributed to clients or suppliers instantly with the push of a button. The method for altering the movements of commodities is laid forth in the E-way bill regulations. It should be noted, nevertheless, that the E-way bill implementation was postponed when the GST Act went into effect on July 1st.

Who need to create an E-Way bill?

The following situations necessitate the creation of an E-way bill by a person who has a GST registration and is causing the transportation of goods.

  • When products are moved to or from a verified individual for a value more than Rs. 50,000, E-Way Bills are generated. If the value of the products is lower than Rs. 50,000, the tax payer can even produce an E-way bill.

  • A person who isn't registered should end up creating an E-way bill. The receiver is liable for ensuring that all requirements are met when an unregistered person supplies goods or services to a registered person.

  • If the provider has not produced an E-way Bill, the transporter must do so in order to move the products by land, air, rail, etc.

Documents necessary to produce E-Way Bills

What records are necessary to create an E-way bill?

  • Valid invoice, bill of supply, or challan for the delivery of items

  • The vehicle number or transporter ID, if a road transport is involved

  • Transporter ID, Transportation document number, and date—whether by ship, rail, or air.

What does an E Way bill look like?

The E-way bill is organized into Parts A and B. The information pertaining to consignment, often the invoicing details, is gathered in Part A of the E-way bill. As a result, the following data must be provided.

  • The recipient's GSTIN must be provided.

  • It is essential to include the shipping destination's Pin code.

  • The number from the invoice or challan for which the goods were supplied must be provided.

  • It is essential to disclose the consignment's value.

  • It is necessary to input the HSN code for the goods being shipped. The HSN code's first two digits should be mentioned if the turnover is up to INR 5 crores. A four-digit HSN code is needed if the revenue is greater than INR 5 crores.

  • The purpose of the trip should be determined in before, and the best one should be chosen.

  • It is necessary to include the document number for the shipment. There are numbers for the goods receipt, the railway receipt, and the airway bill.

How to Produce an E-Way Bill

  • An "electronic way" bill for the movement of commodities is known as an E-Way Bill (EWB), and it can be created on the E-Way Bill Portal. According to GST Council regulations, any supplier or transporter delivering goods worth more than Rs. 50,000 (single invoice/bill/delivery challan) in a single vehicle must carry a GST e-way bill. To get a GST E-Way bill, the supplier or the transporter of the goods must register with the GST. This law will go into force on April 1st, 2018.

  • The portal generates a unique E-Way Bill Number (EBN) and assigns it to the registered supplier, receiver, and transporter once the E-Way bill has been issued using the required credentials. In this post, we examine the procedures for creating an e-way bill on the official website.

How to create an electronic waybill using the electronic waybill gateway

The GST E-Way Portal allows users to produce e-way bills. You must be registered for both GST and transporters in order to utilize the platform.

Step 1: Open the E-Way bill generation website at and log in using your credentials.

Step 2: From the E-Way bill-Main menu page, select the "Generate New" option to start a new E-Way bill.

Online e-way Bill Generation

Step 3: A fresh EWB bill generation form appears. To create a GST invoice, enter the necessary information.

If you are the recipient, choose inward; if you are the supplier, choose outward. Add the recipient's and supplier's information, as well as the GSTIN, if applicable.

When a registered GSTIN is put in the form's designated field, other information is automatically filled in for the vacant fields. Check the details before moving on to the next stage.

Enter Goods Description

Step 4: The information to be filled out on the second half of the page is as follows:

  • Similar to a tax invoice, you must fill out the Product Name and Description fields.

  • You must enter the product's HSN code. HSN code can be found here.

  • The goods' quantity and unit.

  • Both the product's value and the tax rate.

  • Relevant IGST or CGST rates For interstate transportation, IGST would be applicable, and for intrastate transportation, SGST or CGST.

  • Distance of the trip roughly, as well as the transporter's name and ID. The E-Way bill's validity will be evaluated by this.

Step 5: Create an E-way bill

Click "SUBMIT" to produce the EWB after providing all the required information. The E-Way bill, which includes the QR Code with all the information in digital form and the E-Way Bill number, will be shown on the portal. The printed version of the bill should be given to the transporter, who will carry it the entire way until it is turned over to the consignee.

Step 6: E-way Bill generation should be centralized.

By entering simply the "E-Way bill number" in the required area, a consolidated EWB that comprises all the transactional details can also be easily constructed. To produce the combined EWB, click "SUBMIT".

After being created, an E-Way bill can be modified. If the E-Way bill is still in effect and is not past due, information on the transporter, the cargo, the consignor, and both parties' GSTINs can be changed.

E-way bill validity

What is the minimum distance required for E-way bill?

The significant amendment made effective video notification no. 12/2018- Changes to the E-way Bill's Validity Period by Central Tax, issued March 7, 2018. Following is a summary of the E-way bill's new validity period provisions:

Type of Conveyance


E-way bill

Other than Over dimensional cargo

Less than 100 km

For every additional 100 km and thereof

1 day

Additional 1 day

For Over dimensional cargo

Up to 20 km

For every additional 20 km and thereof

1 day

Additional 1 day

The relevant date on which the E-way bill was generated and the validity period would be counted from the time at which the E-way bill was generated, and each day would be counted as the period expiring at midnight of the day immediately following the day on which the E-way bill was generated.

As defined under rule 93 of the Central Motor Vehicle Rules, 1989, created pursuant to the Motor Vehicles Act, 1988, "Over Dimensional Cargo" is defined as cargo that is transported as a single, indivisible unit and that exceeds the dimensional limits (59 of 1988).

Mobile Generation of SMS E-Way Bills

The creation of SMS e-way bills is perfect for businesses with a small amount of transactions because it would be wise to utilize other techniques for larger volumes.

The facility for creating SMS e-way bills can also be used by taxpayers in an emergency, such as one that occurs at night or while they are driving.

Enabling the facility for SMS E-Way Bill Generation

The taxpayer must first register his or her Mobile phone number on the GST e-way bill portal before engaging in any transactions. The system only permits and reacts to mobile numbers that have been registered on the portal for a specific GSTIN.

The following screen appears if the user chooses the "for SMS" option beneath the main "Registration" option.

To register a mobile number, the user must enter it and successfully complete the OTP.

The registered Mobile phone number for the GSTIN is shown on the next screen. If necessary, the user can change their cell number or delink their phone on this screen.

Step 1: Entering the Portal

Both the taxpayer and the transporter are required to open the e-way bill interface and log in with their respective credentials.

Step 2: Register your phone number

By doing as follows, you can enable the SMS e-way bill feature. You are prepared to generate an e-way bill using SMS after validation is finished and the mobile number is registered.

Situations Where E-Way Bill is Not Necessary or Exempt

E-way bills are not necessary for the transportation of the following items:

  • Petroleum gas that has been liquefied and is being supplied to consumers under the NDEC's non-domestic exempt category;

  • Kerosene sold through PDS;

  • Department of Posts personnel transporting mail;

  • Jewelry, goldsmith and silversmith crafts, and other articles (Chapter 71); natural or cultured pearls, valuable or semi-precious stones, precious metals, and metals clad with precious metal;

  • Currency;

  • Items for domestic usage and individual use;

  • Un worked (as of 0508) and worked coral (9601)

E-way bills are not necessary for transporting goods from a customs port, airport, air cargo complex, or land customs station to an inland container depot or a container freight station for customs clearance.

E-way bill generation is not necessary when a non-motorized vehicle is transporting products.

The following items do not require the creation of an e-way bill when being transported:

  • Human use of alcoholic beverages

  • Crude petroleum

  • Rapid-fire diesel

  • Motive force (commonly known as petrol)

  • Aircraft turbine fuel, natural gas

  • An E-way bill is not necessary when there is no supply in accordance with Schedule III of the Act.

The establishment of an E-way bill is not necessary when the products are being transported:

  • From a land customs station to an airport, customs port, air cargo complex, or inland container depot under customs bond, or from one customs station or customs port to another customs station or customs port, or

  • When the commodities being transported are transit cargo from or to Nepal or Bhutan; when the goods being transported are exempt from tax under various notifications; when the items being transported are under customs supervision or customs seal;

  • No E-way bill is required when Central Government, State Government, or a local government acting as a consignor conveys goods by rail.

  • There is no need for an E-way bill when the transfer of commodities is the result of defence formations acting under the Ministry of Defence as consignor or consignee.

  • When transporting empty freight containers, there is no need for an E-way bill.

  • E-way bill generation is not necessary if the items are being carried for weighing purposes and the distance is less than 20 km from the consignor's business to the weighbridge or the other way around. However, a delivery challan is required to be included with the transfer of the items.

  • Other than when transporting de-oiled cake, it is not necessary to generate an e-way bill when transporting the items listed in the schedule attached to notification number. 2/2017-Central Tax (Rate) dated 28.06.2017.

Documents Required For GST E way Bill Solution

Supply Of Goods:

Appropriate invoice, bill of supply, or challan for the consignment of goods

Transport ID:

Transport ID or the vehicle number.

Transport Document:

Transporter ID, Transport document number, and date.

GST E-Way Bill Solution FAQ's

1. When is a registered person required to produce an E-way bill?

Before moving any products with a consignment value over Rs. 50,000, each registered person must create an E-way Bill.

2. Can a transporter provide the details on Form EWB 01's Part A?

Yes, the transporter may only provide the information in Part A of Form GST-EWB-01 if the registered individual has given their consent.

3. Who is responsible for creating an E-way bill if the goods are to be delivered by an ecommerce company or courier service?

When the products to be transported are supplied by an e-commerce operator or a courier agency, with a consignor's authorization, said operator or courier agency may provide the information in Part A of GST EWB-01, and a special number will be generated on the aforementioned portal.

4. Who will construct the e-way bill if the principle sends the items to an employee in another state who works there?

No of the value of the consignment, the principle or job-worker, if registered, must generate the E-way bill in this scenario.

5. Is an e-way bill necessary when moving handcrafted goods when the sender is not a GST registered individual?

Yes, regardless of the value of the consignment or if it is not GST-registered, an e-way bill must be generated.

6. What is consignment value, exactly?

The consignment value of goods is the amount stated on an invoice, a bill of supply, or a delivery challan issued in connection with the consignment in question. This amount also includes any central tax, state or union territory tax, integrated tax, and cess that have been charged.

7.How do you produce an e-way bill?

Once the information is entered into Form GST-EWB-01 on the common portal, an E-way bill can be created.

8. Which information must be provided on the Form GST EWB-01?

Part A contains the recipient's information. Part B: Transporter information.

9. Will the items be delivered to the receiver in the case of rail transportation if the recipient fails to present the e-way bill?

No, unless the recipient presents the e-way bill, the railways will not transport the items.

10. If the e-way bill is not produced by the registered person, who is responsible for providing the information regarding the products that are given over to the transporter for road transportation?

The registered individual must provide the information requested in Part-A of Form GST-EWB-01. The transporter must fill out Part-B of the E-way bill and provide the information based on the information provided by the registered individual.

11. Is an e-way bill required if the value of the shipment is less than Rs. 15,000?

An E-way bill may be generated at the registered person's or the transporter's discretion. The Act makes no such demands.

12. Will the products be delivered to the recipient in the case of rail transportation if the recipient fails to present the e-way bill?

No, unless the recipient presents the e-way bill, the railways will not transport the items.

13. Who is responsible for creating an E-way bill in the event that an unregistered individual moves products in his vehicle or one that is hired?

The unregistered person or the carrier, at their discretion, may generate the e-way bill using Form GST EWB-01.

What is input tax credit?

  • Input tax credit is the term used to describe the amount of central tax (CGST), state tax (SGST), integrated tax (IGST), or cess that a person who is registered for GST has paid on the delivery of goods or services. The IGST imposed on imported goods and the tax paid on a reverse charge basis are both included in the GST input tax. Input tax, however, does not include tax paid under the composite taxation system.

  • To reduce the tax owed after a sale, a business can use the tax it pays on purchases as an input tax credit. Up until it reaches the consumer, value added at each stage of the supply chain forms the basis for the taxing charge.

  • In order to combat the cascading effect of the tax obligation that is paid while purchasing supplies such as plants, machinery, plants, and consumables, the Commodities and Service Tax Act levies a tax on both goods and services based on the concept of value addition. The tax liability is compensated for using the input tax credit.

  • Every individual in the supply chain who has registered for GST participates in control, collects the GST tax, and remits the money they have earned. The tax input credit is offered to offset tax paid on the acquisition of the raw materials, consumables, goods, or services that are used in the production, supply, and sale of goods or services in order to avoid double taxation and the cascading effect of the tax.

  • By Utilizing the input tax credit mechanism in the incidence of tax, the firm can achieve tax neutrality and ensure that the input tax component does not affect the cost of production or the cost of providing goods and services.

Eligibility criteria for Input tax credit

Who can claim input tax credit?

A person who is registered for GST may only claim the input tax credit if they meet the requirements listed below:

  • Only those with a GST registration and who have submitted their GSTR 2 returns may claim the input tax credit.

  • The dealer must be in possession of the tax invoice or debit note issued by the input supplier or the input services.

  • Receiving the aforementioned products, services, or both is required.

  • The GST payment due to the government for this supply has been made by the provider.

  • The input tax credit can only be used when the final batch of goods is received when they are purchased in instalments.

  • Input tax credits are not permitted.

  • If depreciation has been claimed on the tax component of a capital good, no input tax credit is permitted.

Documents required for claiming GST Input tax credit

What documents are required for claiming the GST input tax credit?

The following papers may be used to support an input tax credit claim made by a registered taxable person:

Step: 1 The supplier of the products or services must send an invoice.

Step: 2 A receipts for products and services provided by an unregistered dealer that is accompanied by an invoice. The reverse charge process applies to this supply. A supply made by an unregistered person to a registered person is what this mechanism includes.

Step: 3 The tax levied on a supply is reflected on a debit note that the supplier issues that is less than the tax due on that supply.

Step: 4 A bill of entry or comparable paperwork is also necessary to prove an integrated import tax.

Step: 5 A credit note or invoice provided by an input service distributor in accordance with GST regulations.

Step: 6 A supply bill from a provider of the exempted items, an exporter, or a dealer choosing a composition scheme.

Basic requisites for claiming the input tax credit

What are the conditions under which Input tax credit can be claimed?

For the GST input tax credit to be claimed, the following requirements must be met:

  • The person must be registered with the GST.

  • Either a tax invoice or a debit note issued by a registered supplier that includes the tax amount

  • Receiving the product or service is required.

  • The supplier is responsible for submitting the returns and paying the tax to the government.

  • When receiving items in lots or instalments, you may claim the input tax credit when you get the final lot or instalment.

  • If the input tax credit is not claimed within the allotted time, it will not be granted.

Claiming the Input tax credit

How to claim the Input tax credit?

Every regular taxpayer is required to include the amount in the GSTR 3B.

  • Up to 20% of the valid ITC reported by the supplier in the automatically generated GSTR 2A return may be claimed by the taxpayer as an input tax credit on a pro rata basis in the GSTR 3B. Before moving further with the GSTR 3B, the taxpayer must double-check the GSTR 2A data.

  • A taxpayer might claim any amount of the provisional input tax credit prior to October 9th, 2019. The Provisional Input Tax Credit is limited to 20% of the Eligible ITC available in the GSTR 2A, according to CBIC's notification, which is effective as of October 9, 2019.

  • This makes it crucial to match the purchase register with the GSTR 2A as the amount of input tax credit recorded in the GSTR 3B will be the sum of the actual ITC in the GSTR 2A and the provisional ITC, which is equal to 20% of the actual eligible ITC in the GSTR 2A.

Reversal of Input Tax Credit

In the situations listed below, the input tax credit may be reversed:

  • Failing to make payment to the supplier 180 days after the invoice's due date.

  • Whether inputs or capital assets, the items and services are employed for private consumption.

  • The products and services used to create or provide the exempt products or services.

  • Sale of equipment or capital items for which an input tax credit was claimed.

  • The input service distributor is the one who issues the credit notes.

  • According to section 17(5) of the Act, the supplies are not eligible.

  • The input tax credit is reversed when a registered regular dealer becomes a composite dealer.

  • Interest must be paid from the day the credit is used until the date the amount is reversed and paid. The reversed amount may be added to the output tax liability in the month in which it is reversed.

  • Reclaiming the reversed credit is not subject to any time restrictions.

Availing credit under Reverse Charge Mechanism

How to avail of the credit when the tax has been paid under the Reverse Charge Mechanism?

If the following requirements are met, an input tax credit may be claimed when tax is paid using the reverse charge mechanism in the same month that the payment is made.

  • Cash has been used to pay off the debt.

  • The products or services were utilized for commercial purposes.

  • Since an unregistered provider cannot produce a tax invoice, the purchases are self-invoiced.

Reconciliation of Input tax credit

The information given by the supplier in the GST return must match the input tax credit that the individual is claiming. Once the GSTR 3B is filed, the supplier and the recipient will be made aware of any differences if there are any.

Special cases of Input tax credit

Input tax credit for Capital goods

  • Capital goods used solely to manufacture exempt goods and solely for personal use are not eligible for ITC.

  • In this case, ITC will only be accepted if depreciation has been claimed on the capital goods' tax component.

Input tax credit on the Job work

A job worker may receive commodities from the primary manufacturer for further processing. ITC will be permitted in such circumstances on the following items sent to the job worker:

  • from a primary business location

  • Directly from the supplier of such goods' point of supply.

  • The main must receive the products back within a year to be eligible for the input tax credit.

The Input tax credit that is provided by the Input Service Distributor

  • The main office, a branch office, or the registered office of a person who is registered under GST can all be considered an input service distributor. On every transaction completed and given to every receiver, the input service distributor collects the input tax credit.

  • Input tax credit on the transfer of business

  • This is applicable to business transfers as well as amalgamations and mergers. At the time of the business transfer, the transferee will get the available input tax credit that belongs to the transferor.

Goods and Services not eligible for Input Tax Credit

The following commodities or services are not eligible for the input tax credit under GST:

  • Motor vehicles, unless they are given in the course of business or used to provide taxable services like:

1. The movement of passengers

2. The movement of goods

3. Providing instruction in operating, navigating, and flying such vehicles

4. Additional supplies of similar vehicles or modes of transportation

  • A registered taxable person may not use an inward supply of goods or services of a certain category to make an outward taxable supply of the same type of service, except in the case of outdoor catering, cosmetic and plastic surgery, beauty treatments, and health services.

  • Club, health, and fitness center membership

  • Rent a car, life insurance, and health insurance, unless the provision of such services by an employer is mandated by law.

  • Employees who are on vacation receive travel benefits such as leave or home travel discounts.

  • Other than plant and machinery, the main received goods and services for the building of real property, unless they were input services for the provision of work contract services.

  • other than plant and machinery, goods and services that a taxable person receives for building an immovable property on his account, even if they are utilized to develop their company.

  • Products and services that have received tax payments under the composition programmed.

  • products and services purchased for personal use

  • Goods that were given away as gifts or samples, or that were written off or disposed of.

  • Tax paid following the discovery of fraud, willful misrepresentation, or suppression.

  • Release of commodities that have been impounded or confiscated is taxed.

  • For the release of impounded goods, tax was paid.

  • Documents Required For GST Input Tax Credit Reconciliation

Documents Required For GST Input Tax Credit Reconciliation


Invoice issues by the supplier and recipient of Goods and services.


Debit note issued by the supplier of the tax charged is less than the tax payable concerning such supply.


A bill of entry or similar documents is required to document an integrated tax on imports.


Credit note that is issued by an input service provider as per the rules under GST


Supply bill by a dealer that is operating for a composition scheme or an exporter or a supplier of the exempted goods.

GST Input Tax Credit Reconciliation FAQ's

1. Is GST paid on a reverse charge basis eligible for input tax treatment?

Yes. The tax owed in connection with the reverse charge is covered by the definition of input tax.

2. What are the conditions of availing input tax credit?

Following four conditions are to be satisfied by the registered taxable person for obtaining ITC is in possession of tax invoice or debit note or such other taxpaying documents as may be prescribed; he has received the goods or services or both; the supplier has actually paid the tax charged in respect of the supply to the taxpayer is in possession of a tax invoice or debit note or such other tax-paying documents as may be prescribed. The taxpayer has received the goods or services or both. The supplier has actually paid the tax charged in respect of the supply to the government. The taxpayer has filed the GST return.

3. Can lost or damaged products be eligible for input tax credits?

No, one cannot claim an input tax credit for items that have been written off, lost, stolen, destroyed, or destroyed by fire. Additionally, input tax credits for items given as presents or free samples are not permitted.

4. How do I obtain ITC on products or services used partially for commercial purposes?

The registered person may claim the input tax credit for products or services that are solely related to business purposes. The GST guidelines outline the process for calculating qualifying input tax credits.

5. What takes place if there is an invoice match error during reconciliation?

The supplier and recipient would be informed in the event of a mismatch. If the discrepancy is not fixed, the sum will be added to the recipient's output liability in the return for the month after the month in which the discrepancy was reported.

6. Is meeting the only requirement for input tax credit?

No, the input tax credit is only permitted for a two-month period proviso. The system compares the supply details, and any differences are reported to the recipient and concerned supplier. If the mismatch persists, the ITC received will be automatically reversed.

7. Can GST be paid using a temporary input tax credit?

No, the payment of self-assessed output tax in the return is the sole use permitted for the provisionally approved input tax credit.

8. When should I use my input tax credit?

Only purchases and costs that are made for consumption, use, or supply in business activities are eligible for ITC. The expenses or purchases must be reasonable in terms of quality, nature, and cost in order to qualify for ITC.

9. How much ITC is eligible for claim?

Taxpayers are permitted to claim up to 20% of the admissible ITC that the supplier reports in the automatically prepared GSTR 2A return.

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