ITC on Goods in Transit in GST

It is normal in a business world, to have a situation where the date of supply of goods by the supplier and the date of receipt of goods are in two different months. Let us assume, the supplier has billed and dispatched the goods on March, 2018 but you have received the goods in next month on 4th April, 2018. In general, this situation is known as goods in transit. Here of cutoff procedures will be applicable.


Will see in detailed how can ITC on goods in transit can be claimed in the books between two different periods.


Goods in transit - GST:

The treatment for GST Credit is little different for goods in transit. To answer, we need to understand the conditions prescribed in GST Law to claim ITC.


The following are conditions which the registered businesses need to fulfill to claim ITC.

  • You should have the Tax Invoice/Debit or Credit Note issued by a registered person.

  • The goods/services should have been received.

  • You should have filed GST Returns for the related month.

  • The tax charged has been paid to the government by the supplier, either in cash or through utilization of ITC.

From the first 2 conditions, it clearly states that you should have a tax invoice and more importantly the goods in question should have actually received by you. To be more clear on GST on goods in transit,  let us discuss this considering the example used above.

The supplier has billed and dispatched the goods on March, 2018 but you have received the goods on 4th April, 2018

In the above case, you will become eligible to claim ITC only in the month of April 2018. This is because, only when the invoice and the goods are received, will you be allowed to claim ITC. This is the current provision to claim ITC on goods in transit under GST.


Proposed changes by council on ITC on goods in transit:

With the proposed simplified GST Returns, the provision to claim ITC on goods in transit is simplified. The new proposal allows ITC claim on the date of invoice even if goods are in transit if the following conditions are met:

  1. Your supplier uploads the tax invoice to GST portal by 10th of the subsequent month and

  2. You should receive such goods before 20th of the subsequent month.


Let us understand this change of ITC on goods in transit under GST with some examples.


Situation - 1

Date of Invoice - 28th April,2019

Date of Invoice Upload by the Supplier - 7th May,2019

Date of Receipt of Goods by the Recipient -14th May,2019


In the above case, you will be eligible to avail the ITC in the Month of April, 2019 to be filed by 20th May, 2019. This is because, the invoice is uploaded by the supplier before 10th May, 2018 and the goods are received before 20th May, 2019 which is before the due date to file returns for the month of April, 2018.


Situation - 2

Date of Invoice - 27th April,2019

Date of Invoice Upload by the Supplier - 7th May,2019

Date of Receipt of Goods by the Recipient - 21th May,2019


In the above case, you will not be eligible to avail the ITC in the Month of April, 2019 to be filed by 20th May, 2019. This is because, the goods are not received before 20th May, 2019 which is the due date to file returns for the month of April, 2018. You will be eligible to claim the ITC in the month of May, 2019 to be filed by 20th June, 2019.


Situation - 3

Date of Invoice - 30th April,2019

Date of Invoice Upload by the Supplier - 15th May,2019

Date of Receipt of Goods by the Recipient - 9th May,2019


In the above case, you will not be eligible to avail the ITC in the Month of April, 2019 to be filed by 20th May, 2019. This is because, the invoice is uploaded by the supplier after the 10th of May, 2018. You will be eligible to claim the ITC in the month of May, 2019 to be filed by 20th June, 2019.


Conclusion : The simplification proposed on claiming ITC on goods in transit under GST will help the businesses in having an additional ITC claim on all those goods which are in transit but received before the due date of filing GST returns. It also helps in reducing the number of pending invoice compared to the existing provision of claiming ITC on goods in transit under GST.

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