GST Input Tax Credit (ITC)

ITC is the credit for the GST you pay on business purchases, which you set off against the GST you collect on sales — so tax is paid only on value added.

Section 16(2) lists them, and every one must hold. (a) You possess a tax invoice or debit note from a registered supplier. (aa) The supplier has furnished those details in his statement of outward supplies and they have been communicated to you under section 37 — in practice, they appear in your GSTR-2B. (b) You have received the goods or services; an Explanation deems receipt where goods are delivered to someone else on your direction. (ba) The credit has not been restricted in the statement communicated to you under section 38. (c) The tax has actually been paid to the Government. (d) You have furnished your own section 39 return. On top of those, the first proviso gives credit on goods received in lots only on receipt of the last lot, and section 16(3) bars credit on the tax component of capital goods where you have claimed depreciation on it under the Income-tax Act.

An auto-drafted, static statement of the ITC available to you for a period based on your suppliers' filings. It's the benchmark we reconcile your purchases against.

Generally no — if it's not in your GSTR-2B, claiming it is risky. We flag such vendors so you can chase them before the credit lapses.

Categories that section 17(5) disallows outright, whatever the business rationale. The main ones: motor vehicles for transporting persons with approved seating capacity not more than thirteen including the driver — plus their general insurance, servicing, repair and maintenance — unless used for further supply of such vehicles, passenger transport or driving instruction; vessels and aircraft on a parallel basis, with a carve-out where used for transporting goods; food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, and life and health insurance; club and health-and-fitness-centre membership; leave or home travel concession for employees; works contract services for construction of immovable property other than plant and machinery, except as an input service for further supply of works contract service; goods or services received for construction of immovable property on your own account; supplies taxed under the composition scheme in section 10; supplies received by a non-resident taxable person except goods he imports; inward supplies used for corporate social responsibility obligations under section 135 of the Companies Act 2013; personal consumption; goods lost, stolen, destroyed, written off or disposed of by gift or free sample; and tax paid under section 74 in respect of any period up to FY 2023-24. Two provisos give credit back and are worth testing before writing a claim off: where the inward supply is used to make an outward taxable supply of the same category, or as an element of a taxable composite or mixed supply; and where the employer is obliged under any law in force to provide the benefit to employees. We identify, test and document each one.

Yes, and it is earlier than most people assume. Section 16(4): no credit on an invoice or debit note after the thirtieth day of November following the end of the financial year to which it pertains, or the furnishing of the relevant annual return, whichever is earlier. So a March 2026 invoice must be claimed by 30 November 2026 — unless you file GSTR-9 for FY 2025-26 before that date, in which case the window closes when you file. There is no condonation mechanism. We run a sweep before the cut-off for invoices that arrived late or suppliers who filed late.

If you have not paid a supplier the value of the supply plus the tax within one hundred and eighty days from the date of the invoice, the second proviso to section 16(2) requires the credit availed to be paid back with interest under section 50. Rule 37(1) sets the mechanics: the reversal is proportionate to the amount not paid — a change made with effect from 1 October 2022, so partial payment now gives partial reversal rather than the whole credit — and it is made while furnishing the GSTR-3B for the tax period immediately following the 180-day period. Two reliefs. Rule 37(2) lets you re-avail the credit once you pay, and Rule 37(4) confirms the section 16(4) time limit does not bar re-availment. Supplies made without consideration under Schedule I, and amounts added under section 15(2)(b), are deemed paid. We age your payables against claimed credit so this surfaces in month six rather than at audit.

Not necessarily. Section 16(6) provides that where registration is cancelled under section 29 and the cancellation is later revoked — under section 30, or by the Appellate Authority, the Appellate Tribunal or a court — credit on an invoice that was not already barred by section 16(4) on the date of the cancellation order may still be taken in a section 39 return: either by the ordinary limit, or, for the period from the cancellation to the revocation order, in a return filed within thirty days of the revocation order — whichever is later. It is a short window immediately after restoration and it is easy to miss while catching up on everything else. See GST revocation.

Usually no, and the reasoning is category-based rather than commercial. A car for carrying persons with approved seating capacity of thirteen or fewer including the driver is blocked by section 17(5)(a) unless you are in the business of supplying such vehicles, transporting passengers, or teaching people to drive them — and clause (ab) blocks its insurance, servicing and repair on the same footing. Food and beverages, outdoor catering, and life and health insurance are blocked by clause (b)(i). But check the two provisos before accepting that. Credit is restored where the inward supply is used to make an outward taxable supply of the same category — a caterer buying catering, an insurer insuring — or as an element of a composite or mixed supply; and it is restored where it is obligatory for an employer to provide the same to its employees under any law for the time being in force. That second proviso does real work in practice and is worth testing against your actual statutory obligations.

No. The composition scheme trades lower rates for no input tax credit.

Usually because ITC claimed in GSTR-3B exceeds what's in GSTR-2B. We reconcile and help you reply with evidence.

We produce a clear list of suppliers whose invoices aren't reflected, so you can push them to file before you lose the credit.