Introduction
In many industries, goods are delivered in lots or instalments against a single invoice. The question that arises is: When can the buyer claim ITC on such goods?
This guide explains the legal position, the timing of ITC eligibility, and the practical implications.
Legal Framework: First Proviso to Section 16(2) of the CGST Act, 2017
ITC on Last Lot
The first proviso to Section 16(2) provides that where the goods against an invoice are received in lots or instalments, the registered person is entitled to take credit only upon receipt of the last lot or instalment.
No Proportionate ITC
ITC cannot be claimed proportionately on receipt of each lot. The full ITC is available only when the entire quantity covered by the invoice is received.
Practical Implications
Example
An invoice is raised for 4,000 units. The goods are delivered in four lots of 1,000 units each. ITC is not available on receipt of Lot 1, Lot 2, or Lot 3. ITC becomes available only on receipt of Lot 4 (the last lot).
Tracking Requirements
Businesses must track the receipt of each lot and claim ITC only after the last lot is received.
Documentation Required
- Tax invoice for the goods
- Delivery challans for each lot
- Proof of receipt of the last lot
Best Practices
- Track the receipt of each lot.
- Claim ITC only after the last lot is received.
- Maintain documentation of all delivery challans.
- Reconcile the invoice quantity with the total quantity received.
- Seek professional assistance for complex transactions.
Conclusion
ITC on goods received in lots or instalments is available only upon receipt of the last lot. Proportionate ITC is not allowed. Proper tracking and documentation are essential to ensure correct ITC claims.
Goods received in lots? Anuj Desai & Associates provides expert guidance on GST ITC and compliance. Contact us today.
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