What is Input Tax Credit (ITC)?
- Input Tax Credit (ITC)
- Input Tax Credit (ITC) allows GST-registered businesses to reduce their GST output liability by the GST already paid on purchases used for business purposes.
ITC Eligibility
ITC is available on purchases used for business (not for personal use or exempt supplies). The supplier must have filed their GSTR-1 (reflecting the invoice in your GSTR-2B). The buyer must have received the goods/services and paid the invoice. Time limit: ITC can be claimed until the due date of September return of the next financial year.
ITC Reversal and Blocked Credits
ITC must be reversed for: goods used for personal purposes, exempt supplies (pro-rated), credit notes received from suppliers, and non-payment to supplier within 180 days. Blocked credits (Section 17(5)) include passenger vehicle purchases, food/beverages, and club membership — ITC is not available on these.
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