Section 16

(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. (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; (aa) the details of the invoice or debit note referred to in clause (a) have been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note; (b) he has received the goods or services or both; (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. (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed. (4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. (5) Notwithstanding anything contained in sub-sections (1) and (4), in respect of a supply, the input tax credit in the hands of the recipient shall be reversed if the payment for the said supply, along with the tax payable thereon, is not made to the supplier within a period of one hundred and eighty days from the date of issue of invoice. (6) The registered person shall be entitled to avail of the credit of input tax credit on account of any supply, the registration of the supplier of which has been cancelled under sub-section (2) of section 29 with effect from a date earlier than the date of such cancellation, subject to the condition that the registered person has paid the tax charged on such supply.