GST Input Tax Credit — Rules, Conditions and Claim Process Explained

The taxpayer must possess a valid tax invoice or debit note from a registered supplier. The goods or services must be received and used for business.

The supplier must have filed GSTR-1 and paid tax. Invoice details must appear in the recipient's GSTR-2A. The recipient must file GSTR-3B claiming ITC by the due date.

Motor vehicles (except specified cases), food and beverages, outdoor catering, beauty treatment, health services, club memberships, and travel benefits are ineligible for ITC.

ITC on goods used for construction of immovable property (other than plant and machinery), goods lost, stolen, destroyed, written off, or given as free samples is also blocked.

When inputs are used partly for business and partly for exempt supplies, ITC must be apportioned under Rule 42. Reversal is calculated based on exempt turnover ratio. Annual reconciliation is required at year-end.

Rule 43 provides for reversal of ITC on capital goods used partly for exempt supplies over their useful life.

The GST system matches ITC claimed in GSTR-3B with details furnished by the supplier in GSTR-1. Excess ITC is added to output tax liability with interest.

Regular reconciliation of ITC as per books with GSTR-2B is essential to identify mismatches early. Missing invoices must be followed up with suppliers.

Time limitation for claiming ITC — must be claimed before September 30 of the following financial year. Denial due to supplier default — courts have provided relief for genuine transactions. Incorrect GSTIN on invoices prevents ITC flow.

Refund can be claimed for exports, supplies to SEZ, inverted duty structure, and accumulated ITC. Application is filed online in Form RFD-01. Refund should be processed within 60 days.