Concept of claiming eligible input tax credit on provisional basis done away by Budget 2022

Union Budget 2022 has proposed an amendment in Section 41 of the CGST Act. Same is now being substituted so as to do away with the concept of “claim” of the eligible input tax credit on a “provisional” basis and to provide for availment of self-assessed input tax credit subject to such conditions and restrictions as may be prescribed.

Download Finance Bill, Budget Speech, and Memorandum to Finance Bill 2022

The Amendment as per Finance Bill is as follows:

Availment of input tax credit

105. For section 41 of the Central Goods and Services Tax Act, the following section shall be substituted, namely:––

“41. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to avail the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited to his electronic credit ledger.

(2) The credit of input tax availed by a registered person under sub-section (1) in respect of such supplies of goods or services or both, the tax payable whereon has not been paid by the supplier, shall be reversed along with applicable interest, by the said person in such manner as may be prescribed:

Provided that where the said supplier makes payment of the tax payable in respect of the aforesaid supplies, the said registered person may re-avail the amount of credit reversed by him in such manner as may be prescribed.”.