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Outbyte PC Repair FREEClear out junk files and repair common Windows errorsFree Scan →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →GST input tax credit (ITC) is not automatic just because a business has an invoice. In India, a registered person generally needs a business-use purchase, receipt of the goods or services, a prescribed tax document, the required supplier reporting and GSTR-2B checks, and a claim within the statutory time limit. The credit may also be reduced for exempt or personal use, or denied altogether as blocked credit under section 17(5) of the Central Goods and Services Tax Act (CGST Act).
This guide explains the general CGST framework as of 5 October 2026. State GST provisions generally operate alongside it, but state-specific rules are not compared here. Whether a particular expense qualifies depends on its facts and the applicable Act, rules and exceptions.
Who can claim GST input tax credit?
Section 16(1) of the CGST Act allows a registered person to take credit of input tax on goods or services used, or intended to be used, in the course or furtherance of business, subject to the Act’s conditions and restrictions. ITC is therefore a conditional tax credit, not a general refund of GST paid on purchases.
Use this eligibility checklist
- Confirm the recipient is registered and the claim is otherwise eligible. Section 16 sets out the general entitlement for registered persons; the remaining conditions and restrictions still apply.
- Establish a business connection. The goods or services must be used, or intended to be used, in the course or furtherance of the business. Personal or other non-business use is not eligible to that extent.
- Confirm receipt. The goods or services must have been received. If goods arrive in lots or instalments, section 16 provides that credit is taken upon receipt of the last lot or instalment.
- Hold the prescribed tax document. The document must support the credit and meet the applicable requirements; the eligible document types are described below.
- Check supplier reporting and GSTR-2B. For invoices and debit notes subject to supplier reporting, verify that the details have been furnished and communicated to you in GSTR-2B.
- Check for restrictions and apportionment. Determine whether the purchase is blocked, partly for exempt supplies, or partly for non-business use.
- Claim within the time limit. Apply the general deadline and check whether any narrowly applicable statutory relief changes the result.
Section 16(2) also addresses payment of the charged tax to the government under the statutory framework and filing of the relevant return. These conditions work together; satisfying one does not establish that all the others are met.
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Two conditions that can require a later reversal or limit the credit
- Supplier payment within 180 days: If the recipient does not pay the supplier the value of the supply plus tax within 180 days from the invoice date, the section 16 proviso requires an amount equal to the ITC availed to be added to output tax liability, with interest as prescribed. Credit can be taken again when payment is made. Supplies subject to reverse charge are excluded from this particular 180-day condition.
- Depreciation on the tax component: Section 16(3) disallows ITC on the tax component of capital goods or plant and machinery where that component is included in the cost on which income-tax depreciation is claimed. This prevents a double benefit.
What is blocked credit under GST?
“Blocked credit” commonly refers to items listed in section 17(5), but not every restriction works the same way. A business may need to apportion credit for mixed use, while a specifically listed expense may be blocked unless an exception in the law applies. The precise statutory category, purpose and facts matter.
Apportionment for exempt or non-business use
Under section 17, credit is restricted where goods or services are used partly for non-business purposes or partly for exempt supplies. In general, only the business-use share attributable to taxable or zero-rated supplies is available, subject to the prescribed calculation rules. A purchase used for more than one purpose should therefore be assessed and allocated rather than treated as wholly creditable merely because the business paid the invoice.
Categories listed in section 17(5)
Section 17(5) specifies categories of blocked credit, subject to exceptions written into the relevant clauses. They include:
- Specified motor vehicles and conveyances.
- Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery.
- Membership of a club, health or fitness centre.
- Specified rent-a-cab, life insurance and health insurance services.
- Travel benefits extended to employees, such as leave or home travel concession.
- Works contract services for construction of immovable property, except where the service is used for further supply of works contract service.
- Goods or services used to construct immovable property on the taxpayer’s own account, including where used in the course or furtherance of business; plant and machinery is subject to its statutory treatment.
- Supplies on which tax is paid under the composition scheme.
- Supplies received by a non-resident taxable person, other than goods imported by that person.
- Goods or services used for personal consumption.
- Goods lost, stolen, destroyed or written off, or disposed of by way of gift or free samples.
- Tax paid in specified fraud-related demand cases.
How to assess an expense that may be blocked
Do not decide from an expense label alone. For a real claim, identify the exact section 17(5) clause, establish the business and output-supply use, and then check whether that clause contains an exception and whether its conditions are met. If the purchase is a capital asset, also check the separate depreciation restriction in section 16(3). The statutory text and applicable rules should be reviewed before claiming credit in a borderline case.
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Which documents are required to claim ITC?
The CGST Rules recognize prescribed documents as evidence for ITC. They include:
- A supplier tax invoice issued under section 31.
- A debit note.
- A bill of entry or other prescribed import document for integrated tax paid on imports.
- Documents issued by an Input Service Distributor.
Rule 36 sets requirements for the applicable particulars on these documents. It also contains a limited provision for certain cases where some particulars are missing but specified core details are present. That is not a general permission to claim ITC from any informal receipt: use the prescribed document type and verify the applicable rule requirements.
Keep records that support the substance of the claim
Keep the tax invoice or other prescribed document together with records that show what was received, why it was used for business, and how the claimed amount was calculated. Where use is mixed, retain the basis and workings for the allocation. The Accounts and Records Rules require registered persons, subject to stated exceptions, to maintain accounts of input tax and ITC claimed and a register of relevant tax documents. Supporting receipt and business-purpose records help establish facts that the tax document alone may not show.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What if an invoice is missing from GSTR-2B?
For invoices and debit notes that suppliers must report under section 37, Rule 36(4) requires the supplier’s details to be furnished in GSTR-1 or through the invoice furnishing facility and communicated to the recipient in GSTR-2B. Reconcile those entries against your purchase register and tax documents before claiming the related credit.
Practical reconciliation steps
- Match supplier invoices and debit notes in your purchase records against the corresponding GSTR-2B entries.
- Identify missing entries, incorrect amounts or other mismatches, and follow up with the supplier to correct or furnish the relevant details.
- Keep the reconciliation and supporting documents with your ITC records, and assess the claim against the statutory conditions that apply to the invoice.
A missing GSTR-2B entry is a material issue to investigate for an invoice subject to these reporting requirements. But GSTR-2B by itself does not prove every condition for ITC, such as receipt and business use; conversely, a reconciliation issue should not be treated as automatically resolving the legal eligibility question. Apply the current Act, rules and portal requirements for the relevant tax period.
What is the GST ITC time limit?
Under the current general rule in section 16(4), ITC for an invoice or debit note cannot be taken after 30 November following the end of the financial year to which it pertains, or the date the relevant annual return is furnished, whichever is earlier. This deadline reflects the amendment clarified in CBIC Circular No. 237/31/2024-GST; older copies of the consolidated Act may show the earlier September wording.
Limited historical relief under sections 16(5) and 16(6)
The Finance (No. 2) Act, 2024 inserted subsections 16(5) and 16(6) with retrospective effect from 1 July 2017 for specified situations. CBIC Circular No. 237/31/2024-GST, dated 15 October 2024, explains their implementation. These provisions are limited relief for qualifying cases, not a general extension of the deadline for every late claim. A taxpayer considering them should check the circular and the law applicable to the specific period and circumstances.
Which official rules should you check?
The core eligibility and blocked-credit provisions are in sections 16 and 17 of the CGST Act. Document requirements and supplier-reporting rules are in the CGST Rules, including Rule 36, and the relevant record-keeping provisions. For the amended deadline and retrospective relief, consult CBIC Circular No. 237/31/2024-GST dated 15 October 2024 alongside the current Act. Rules, forms and portal instructions can change, so confirm the requirements applicable to the tax period before filing or correcting a claim.
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