ITC of goods received in lots or installments

Taking Input Tax Credit is a very crucial issue in the GST law. Every taxpayer is concerned about the timing of taking Input Tax Credit (ITC) in his books of accounts. According to Section 16(2) of CGST Act, 2017, the registered person can take the ITC only when the goods or services are received by him. But a question comes to mind that when could we take ITC where goods are recieved in multiple lots or installments. 

Answer to this question is very simple and it must be clear that ITC in such cases shall not be available proportionately on receipt of each lot or installment of goods. According to First Proviso to section 16(2) of CGST Act, 2017, in such cases, the registered person shall be eligible to take ITC only when last lot or installment of goods is received by him.

We will take an example to understand the above provision:-

A Limited purchased cotton cloth measuring 10,000 metres of value Rs. 10 Lakhs and GST thereon Rs. 50,000. Date of invoice is 10th February 2021. However, the goods are received from supplier B Limited in 2 lots:-

Ist Lot:- 5,000 metres on 27th February, 2021
2nd Lot:- 5,000 metres on 2nd March, 2021

In this example, A Limited is eligible to take ITC of Rs. 50,000. However, such ITC can be taken only in the return filed in the month of March, 2021. No ITC can be taken against this invoice in the month of February, 2021.