ELIGIBILITY AND CONDITIONS FOR TAKING INPUT TAX CREDIT [SECTION 16]

Section 16 Eligibility and conditions for taking input tax credit.

Sub-section (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

Sub -Section (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;
(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.
(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 added to his output tax liability, along with
interest thereon, 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 of the amount towards the value
of supply of goods or services or both along with tax payable thereon.