Section 41 – Claim of Input Tax Credit and its provisional acceptance
Section 41 of CGST Act, 2017 – Claim of Input Tax Credit and Provisional Acceptance
Updated on: February 2026 (as applicable till date)
Prepared by: Yours Tax Consultant
1. Background of Section 41
Section 41 governs the claim and utilisation of Input Tax Credit (ITC) by a registered person.
This section has undergone major amendment to align GST with a self-assessment based ITC system.
2. Statutory Provision – Section 41 (As Amended)
Section 41(1):
Every registered person shall be entitled to take the credit of eligible input tax,
as self-assessed, in his return
and such amount shall be credited to his electronic credit ledger.
Section 41(2):
If the input tax credit availed by a registered person
is not paid to the Government by the supplier,
such credit shall be reversed by the recipient
along with applicable interest.
The recipient shall be entitled to re-avail the credit on payment of tax by the supplier.
3. Key Change After Amendment
Earlier, ITC was described as provisional.
After amendment:
- ITC is self-assessed
- No concept of automatic provisional acceptance
- Responsibility is shifted to the recipient
This change strengthens compliance discipline.
4. When Can ITC Be Claimed?
ITC can be claimed when:
- Recipient is a registered person
- Tax invoice or debit note is available
- Goods or services have been received
- Return under Section 39 is furnished
These conditions must be read with Section 16.
5. Supplier Default and ITC Reversal – Section 41(2)
If the supplier:
- Files GSTR-1, but
- Does not pay tax to the Government
then:
- Recipient must reverse ITC
- Interest under Section 50 is payable
This applies even if the recipient acted in good faith.
6. Re-availment of ITC
Once the supplier pays the tax:
- Recipient can re-avail ITC
- No separate approval required
Re-availment is allowed in the return for the period in which supplier makes payment.
7. Section 41 Read with GSTR-2B
Practically, Section 41 operates through:
- GSTR-2B (static ITC statement)
- Auto-population from supplier returns
ITC not reflecting in GSTR-2B is exposed to reversal and litigation risk.
8. Section 41 vs Section 16
Section 16 provides:
- Eligibility conditions for ITC
Section 41 provides:
- Mechanism for claiming and reversal
Both sections must be complied with simultaneously.
9. Related Rules
10. Common Practical Issues
- Claiming ITC without GSTR-2B reflection
- Failure to reverse ITC on supplier default
- Interest liability under Section 50
- Departmental notices during scrutiny
11. Related Provisions
- Section 16 – Eligibility and conditions for ITC
- Section 39 – Furnishing of returns
- Section 50 – Interest on delayed payment
12. Professional Insight
After amendment, ITC is no longer “provisionally safe”. Section 41 makes the recipient responsible for supplier compliance — reconciliation is non-negotiable.
Disclaimer: This article is prepared based on the CGST Act, CGST Rules, notifications and prevailing legal position as applicable till date. Future amendments or judicial pronouncements may require revision.
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