INPUT TAX CREDIT UNDER GST: A STATUTORY RIGHT OR A CONDITIONAL CONCESSION?
AUTHOR – ADERSH BIJU, STUDENT AT SYMBIOSIS LAW SCHOOL, PUNE
BEST CITATION – ADERSH BIJU, INPUT TAX CREDIT UNDER GST: A STATUTORY RIGHT OR A CONDITIONAL CONCESSION?, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (1) OF 2026, PG. 08-18, APIS – 3920 – 0001 & ISSN – 2583-2344.
Abstract
The Goods and Services Tax (GST) was introduced in India with the stated objective of eliminating the cascading effect of indirect taxation through a seamless credit mechanism. At the heart of this framework lies Input Tax Credit (ITC), which enables taxpayers to offset tax paid on inputs against their output tax liability. While ITC is often described as the backbone of the GST regime, its legal character remains contested. Courts and tax authorities have alternately treated ITC as a vested statutory right and as a conditional concession subject to strict compliance with statutory and procedural requirements.
This paper critically examines whether Input Tax Credit under the Central Goods and Services Tax Act, 2017 constitutes a substantive statutory entitlement or merely a concession granted at the discretion of the legislature. Through doctrinal analysis of statutory provisions, delegated legislation, and judicial pronouncements, the paper highlights the increasing restrictions placed on ITC, particularly in cases involving supplier default, procedural lapses, and administrative control over credit ledgers. It argues that the growing tendency to characterise ITC as a concession undermines the foundational objectives of GST, increases litigation, and shifts the burden of tax compliance onto bona fide recipients. The paper concludes that while reasonable conditions on ITC are permissible, its erosion through excessive restrictions risks diluting taxpayer certainty and the promise of a unified indirect tax system.
Keywords: Input Tax Credit, GST, statutory right, conditional concession, indirect taxation, taxpayer rights