What is input tax credit?
ITC lets a registered business deduct the GST paid on purchases from the GST collected on sales, so tax is charged only on the value added. It is the single biggest lever on GST cost for most businesses.
Conditions to claim ITC
- Possession of a valid tax invoice, debit note or other prescribed document
- Receipt of goods or services
- Tax actually paid to the government by the supplier (reflected in GSTR-2B)
- Return filed by you, within the statutory time limit
- Use for business and not in a blocked category
Blocked and ineligible credits
Section 17(5) lists categories where ITC is not available, such as certain motor vehicles, food and beverages, club memberships and goods used for personal consumption. Identify them before claiming. Use the HSN finder to classify purchases.
Reconciliation with GSTR-2B
GSTR-2B is the reference for ITC. Reconcile it monthly with your purchase register and chase suppliers for missing invoices. Read how to read GSTR-2B and the IMS guide.
Reversals, time limits and notices
ITC must be reversed in specified cases such as non-payment to suppliers within the prescribed period, goods lost or used for exempt supplies. Claims are also time-barred after the statutory deadline (see the ITC deadline page).
Free tools for this topic
GST Calculator
Add GST to a price or extract GST from a GST-inclusive amount with CGST / SGST / IGST split.
Learn more →GST Composition Scheme Calculator
Compare tax under the composition scheme and the regular scheme using your turnover, purchases and GST rate.
Learn more →GSTIN & PAN Validator and Decoder
Validate a GSTIN or PAN format, verify the checksum and decode the state code and holder type.
Learn more →All articles in this guide (6)
Auto-Component and Engineering Suppliers in Chennai: ITC, Job Work and E-Way Bill
Chennai's auto and engineering supply chain depends on timely GST invoices and job-work movement.
GSTR-2B Reconciliation Automation With AI: How It Works
How software matches purchase registers to GSTR-2B using fuzzy matching and rules, and how to keep control.
Maximizing Input Tax Credit: A Startup's Guide to Cost Savings
How Input Tax Credit works, the conditions to claim it, and the mistakes that quietly cost startups money.
Restaurants and Cloud Kitchens in Kochi: GST, Aggregators and Compliance
Kochi's food scene mixes restaurants, bakeries and cloud kitchens that rely on delivery platforms.
Invoice Management System (IMS) in GST: Accept, Reject, Pending
How the GST portal's IMS works, why it matters for your ITC and the practical workflow before GSTR-2B generation.
How to Read GSTR-2B and Claim Input Tax Credit Correctly
GSTR-2B is the basis of your ITC claim. Learn each section, the common mismatches and a monthly reconciliation routine.
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Frequently asked questions
What is the time limit to claim ITC?
ITC for a financial year must be claimed by 30 November following the year-end (or the date of the annual return, whichever is earlier).
Can I claim ITC if my supplier has not filed GSTR-1?
No. The invoice must appear in your GSTR-2B, which depends on the supplier's return.
Is ITC available on rent and office expenses?
Generally yes for business use if conditions are met, except blocked categories.
Can composition taxpayers claim ITC?
No.