GST ITC Rules — Input Tax Credit Eligibility & Blocked Credits

Updated: 3 June 2026

Input Tax Credit (ITC) under GST can be claimed on inputs, input services, and capital goods used for business. Core ITC rules: ITC is auto-populated in GSTR-2B — the supplier must file GSTR-1 first before you can claim it. Claim within the time limit: earlier of 30 November after financial year end, or date of filing the September return. Certain expenses are blocked under Section 17(5) — including motor vehicles (personal use), food and beverages, club memberships, beauty treatment, construction of immovable property, and gifts above ₹50,000. Annual ITC reconciliation is required in GSTR-9.

GSTR-2B ITC only from GSTR-2B — supplier must file GSTR-1 first. Do not claim ITC based on physical invoices alone.

Blocked ITC Under Section 17(5) — Complete List

These categories of GST paid cannot be claimed as ITC. They are a permanent cost to the business.

Category	Blocked Under	Exception (ITC Allowed If)
Motor vehicles (cars, two-wheelers, aircraft, vessels)	Section 17(5)(a)	Used for further supply of vehicles, passenger transport business, driving training, or goods transport
Food, beverages, outdoor catering	Section 17(5)(b)(i)	You are in catering/restaurant business making taxable supplies of same category
Beauty treatment, health services, cosmetic surgery	Section 17(5)(b)(ii)	You are providing the same service as outward taxable supply
Club, health, and fitness centre membership	Section 17(5)(b)(iii)	Not applicable — always blocked
Rent-a-cab service	Section 17(5)(b)(iv)	Obligatory under any law to provide; or making same outward taxable supply
Life insurance and health insurance	Section 17(5)(b)(v)	Obligatory under any law to provide to employees; or making same outward taxable supply
Works contract for immovable property (construction, renovation)	Section 17(5)(c)	Plant and machinery — if the immovable property is plant and machinery, ITC allowed
Goods/services for construction of immovable property	Section 17(5)(d)	Same exception: plant and machinery
Gifts or free samples to employees (> ₹50,000/year)	Section 17(5)(h)	Not applicable — blocked above ₹50K threshold
Goods lost, stolen, destroyed, written off, or given as free samples	Section 17(5)(h)	Not applicable — always blocked

ITC Eligibility Conditions & Time Limits

Condition	Requirement
Tax invoice or debit note	Must hold a valid tax invoice/debit note issued by a registered supplier
Tax actually paid by supplier	Supplier must have paid GST to the government (reflected in GSTR-2B)
Goods/services received	Must have received goods or services (or both); for goods in installments, ITC on last installment
GSTR-3B filed	You must have filed your own GSTR-3B return for the period
Time limit — last date	Earlier of: 30 November following the FY end, or date of filing annual return (GSTR-9)
Reversal on non-payment to supplier	If supplier invoice not paid within 180 days, ITC must be reversed; can be re-claimed once paid
Proportionate reversal (Rule 42/43)	If goods/services are partly used for exempt supplies, ITC must be reversed proportionately
Annual reconciliation	ITC availed in GSTR-3B must be reconciled with GSTR-2B and reported in GSTR-9

How ITC Flows — GSTR-1 to GSTR-2B to GSTR-3B

ITC in GST follows a document trail: your supplier files GSTR-1 (outward supplies) → the data auto-populates in your GSTR-2B (auto-drafted ITC statement, generated monthly on the 14th) → you claim ITC in GSTR-3B (Table 4) based on GSTR-2B. If your supplier does not file GSTR-1, the invoice will not appear in GSTR-2B, and you cannot claim ITC — even if you hold the physical invoice and have paid the GST.

GSTR-2B is static (does not change after generation). GSTR-2A is dynamic and updates in real time. For ITC claims, GSTR-2B is the controlling document as per Rule 36(4).

Frequently Asked Questions

What is blocked credit under Section 17(5)?

Blocked credit under Section 17(5) of the CGST Act refers to specific categories of inputs or input services on which Input Tax Credit (ITC) cannot be claimed, even if GST was paid. Key blocked categories include: motor vehicles used for personal purposes, food and beverages (unless you run a restaurant or catering business), club or health/fitness centre membership fees, beauty treatment services, construction services or goods used for construction of immovable property (other than plant and machinery), works contract services for immovable property, and gifts or free samples exceeding ₹50,000 to an employee in a year. These restrictions exist because these expenses are considered personal or non-business in nature.

How to claim ITC in GSTR-3B?

To claim ITC in GSTR-3B: (1) Verify ITC available in GSTR-2B (auto-populated from suppliers' GSTR-1 filings). (2) Open GSTR-3B on the GST portal and navigate to Table 4 — Eligible ITC. (3) Enter ITC available from GSTR-2B in Section 4(A)(5) — "All other ITC". (4) Reverse any ITC that is not eligible (blocked under Section 17(5) or reversal under Rule 42/43) in Section 4(B). (5) Net ITC (4A minus 4B) will be auto-calculated and credited to your Electronic Credit Ledger. ITC can only be claimed if your supplier has filed GSTR-1/IFF and the invoice appears in your GSTR-2B. Do not claim ITC based on physical invoices alone.

Can I claim ITC on a company car?

ITC on motor vehicles is blocked under Section 17(5)(a) in most cases. You cannot claim ITC if the vehicle is used for personal transport, commuting employees to/from office, or general corporate use. However, ITC IS allowed if the motor vehicle is used for: (1) further supply of vehicles (e.g., you are a car dealer), (2) transportation of passengers as a business (e.g., cab service, taxi operator), (3) imparting driving training, or (4) transportation of goods (trucks, lorries, delivery vans). So an HR car or MD car for corporate use: ITC blocked. A delivery truck or a cab fleet vehicle: ITC allowed.

Can I claim ITC on food and beverages?

Generally, ITC on food and beverages is blocked under Section 17(5)(b). You cannot claim ITC on canteen meals, office food supply, snacks for employees, or team lunch/dinner expenses. However, there are exceptions: ITC is allowed if (1) you are in the restaurant business, catering business, or outdoor catering (and the service is used for making outward taxable supply of the same category), or (2) it is an obligation under any law to provide food to employees (e.g., mines, factories under Factories Act). In all other cases, GST on food is a cost to the business — ITC is blocked.

What is the time limit for claiming ITC?

ITC must be claimed by the earlier of: (1) 30 November of the following financial year (e.g., for FY 2025-26, ITC must be claimed by 30 November 2026), or (2) the date of filing the annual return (GSTR-9) for that year. So if you file GSTR-9 for FY 2025-26 on 20 October 2026, ITC for that year must be claimed in returns filed up to 20 October 2026. Missing this deadline means the ITC lapses permanently — you cannot carry it forward or adjust it later. As per the Finance Act 2022, this time limit is now codified in Section 16(4).

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