Input Tax Credit (ITC) lets you reduce the GST you pay on sales by the GST you already paid on purchases. Used properly, it significantly lowers your tax outgo.
Conditions to claim ITC
- You must have a valid tax invoice.
- The goods or services must be received.
- The supplier must have actually paid the tax and filed their return.
- The invoice must appear in your GSTR-2B.
Where businesses lose ITC
The biggest leak is a mismatch between your purchase records and GSTR-2B — usually because a supplier has not filed. Monthly reconciliation is the fix.
Blocked credits
Some items, such as personal-use goods and certain motor vehicles, are ineligible even if GST was charged.
We reconcile ITC every month for our GST clients so no eligible credit is ever left on the table.
