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Input Tax Credit Under GST

  • 13-May-2024

Are you a business owner struggling to understand Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime? You're not alone! This blog, facilitated by the expertise of CA Vikas Jain, aims to simplify this crucial concept and empower you to maximize your tax benefits.

Within this blog, you'll discover:

  • The ABCs of ITC: A clear explanation of what Input Tax Credit entails, its role in GST, and how it impacts your business finances.
  • Eligibility criteria: A breakdown of who can claim ITC, what types of purchases qualify, and the essential documents required for claiming credit.
  • Maximizing your ITC: Practical tips and strategies to ensure you're claiming all the eligible ITC, minimizing your tax liability.
  • Common pitfalls to avoid: Expert guidance from CA Vikas Jain to address frequently asked questions (FAQs) and steer you clear of common mistakes related to ITC claims.

Confused about claiming ITC on capital goods, ineligible expenses, or the reversal of credit? We've got answers! This blog equips you with the knowledge to navigate the complexities of ITC under GST with confidence.

Stay tuned for informative articles and expert insights to ensure you're optimizing your ITC claims and minimizing your GST burden!


The rise in legal disputes concerning incorrect ITC claims under GST highlights the importance of adhering to specific guidelines for GST registered buyers. This article provides crucial pointers to ensure compliance, minimize disputes, and avoid penalties while availing ITC. 

Key Points for ITC Compliance: 

Valid Tax Invoice/Debit Note: Possession of a valid tax invoice or debit note is mandatory. Ensure it adheres to Rule 46 and 53 of CGST Act, including details like supplier name, GST number, place of supply, HSN code, GST rate, and invoice number (not exceeding 16 digits). For imports, claim ITC based on the Bill of Entry for IGST paid. 

GSTR-2B Matching: The details furnished by the supplier in their GSTR-1 must be reflected in the buyer's GSTR-2B for ITC eligibility. 

Receipt of Goods/Services: The buyer must have demonstrably received the goods or services. ITC for goods received in installments can be claimed only upon receiving the final installment. 

Supplier Tax Payment: The supplier must have paid the tax and filed their GSTR-3B for ITC eligibility. 

Restrictions under Section 38: ITC cannot be availed in scenarios specified under Section 38 of the CGST Act. These include continuous tax defaults by the supplier, discrepancies between tax shown and paid in supplier's GSTR filings, or excess ITC availed by the supplier. 

Payment to Supplier: Make payments to the supplier within 180 days from the invoice date. Delaying payment beyond 180 days necessitates ITC reversal with interest. However, re-availment of ITC is possible upon making the payment (no time limit for re-availment). 

Due Date for ITC Availment: The deadline to claim ITC for an invoice or debit note is the earlier of:  

November 30th of the next financial year, or 

Due date for filing the annual return for that financial year. 

ITC cannot be claimed beyond these dates. 

Depreciation on GST: ITC cannot be claimed if depreciation is claimed on the GST component of a capital good. 

Blocked Credits: Certain items are ineligible for ITC under Section 17(5) of the CGST Act, including staff welfare expenses, rental cab services, employee health insurance, health club memberships, and taxes paid under the composition scheme. 


Effective ITC management is crucial for GST compliance. By following these guidelines on invoice validation, GSTR-2B reconciliation, receipt verification, supplier tax payment, timeliness, and blocked credits, GST registered buyers can navigate the complexities of ITC availment, minimize legal risks, and ensure smooth compliance with GST regulations. 

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