Input tax credit (ITC) is the heart of GST — the mechanism that stops tax stacking on tax. Used well, it materially reduces what you pay. Misused, it is the top source of notices.

The golden conditions

To claim credit on a purchase you generally need: a valid tax invoice, actual receipt of the goods or services, the supplier having reported the invoice (it must appear in your GSTR-2B), and payment to the supplier within the prescribed time.

Where businesses lose credit

  • Supplier defaults: if your vendor does not file, your credit disappears — vet your vendors
  • Blocked categories: certain expenses (like some vehicles, food, personal-use items) are ineligible regardless of invoices
  • Missed deadlines: credit for a financial year must be claimed within the notified cut-off

The monthly habit that protects you

Reconcile your purchase register against GSTR-2B every month, chase missing invoices immediately, and keep payment proofs. That one habit protects your working capital better than anything else in GST.

Our GST filing service includes 2B reconciliation every month. Book a free consultation.