You can claim Input Tax Credit (ITC) on GST paid on inputs, input services and capital goods used for business — but only if all Section 16 conditions are met: a valid tax invoice, goods/services actually received, the invoice reflected in your GSTR-2B, and your own GSTR-3B filed. ITC must be claimed by the earlier of 30 November of the next financial year or the date of filing the annual return (GSTR-9). Certain expenses are blocked under Section 17(5), and unpaid supplier invoices must be reversed after 180 days.
ITC Eligibility Conditions
ITC is available only when every condition in Section 16 of the CGST Act is satisfied. Fail any one and the credit is not admissible — even if GST was genuinely paid.
| Condition | Requirement | Section / Rule |
|---|---|---|
| Valid tax document | Hold a tax invoice or debit note from a registered supplier | Sec 16(2)(a) |
| Reflected in GSTR-2B | Invoice must appear in your auto-drafted GSTR-2B | Sec 16(2)(aa) · Rule 36(4) |
| Goods / services received | You must actually have received the supply (last lot, for staggered goods) | Sec 16(2)(b) |
| Tax paid to government | Supplier must have paid the GST to the exchequer | Sec 16(2)(c) |
| Own return filed | You must have filed your GSTR-3B for the period | Sec 16(2)(d) |
| Business use | Input must be used or intended for business, not personal use | Sec 16(1) |
| Within time limit | Claimed by 30 Nov of next FY or GSTR-9 date, whichever is earlier | Sec 16(4) |
Do not claim ITC from physical invoices alone — GSTR-2B is the controlling document under Rule 36(4).
If your supplier has not filed GSTR-1/IFF, the invoice will not appear in your GSTR-2B and the credit is blocked under Section 16(2)(aa) — regardless of whether you hold the invoice and have paid the supplier. Chase non-filing vendors before your 30 November deadline.
How ITC Flows — GSTR-1 → GSTR-2B → GSTR-3B
ITC in GST follows a document trail. Your supplier files GSTR-1, the data auto-populates your GSTR-2B (a static statement generated monthly), and you then claim the eligible amount in Table 4 of your GSTR-3B.
- 1Supplier files GSTR-1Outward invoices uploaded
- 2Your GSTR-2BAuto-drafted, static ITC statement
- 3You claim in GSTR-3BTable 4 — eligible ITC
- 4Credit ledgerITC credited, set off against output tax
GSTR-2B is static (frozen after generation), while GSTR-2A is dynamic and keeps updating. For claiming ITC, GSTR-2B is the controlling document as per Rule 36(4). Reverse any blocked or ineligible portion in Table 4(B) before the net credit hits your Electronic Credit Ledger.
GSTR-2B not matching your books? Get your ITC reconciled before the deadline.
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Blocked Credits — What You Cannot Claim
Section 17(5) lists categories where ITC is blocked even though GST was paid. This tax becomes a permanent cost to the business. Some categories have narrow exceptions.
| Category | Blocked Under | ITC Allowed If |
|---|---|---|
| Motor vehicles (cars, two-wheelers, aircraft, vessels) | 17(5)(a) | Further supply of vehicles, passenger transport, driving training, or goods transport |
| Food, beverages, outdoor catering | 17(5)(b)(i) | You make an outward taxable supply of the same category |
| Beauty treatment, health services, cosmetic surgery | 17(5)(b)(i) | Same outward taxable supply |
| Club, health & fitness centre membership | 17(5)(b)(ii) | Always blocked |
| Rent-a-cab, life & health insurance | 17(5)(b)(i) | Obligatory under law for employees, or same outward supply |
| Works contract for immovable property | 17(5)(c) | It is plant & machinery |
| Goods/services for own construction of immovable property | 17(5)(d) | It is plant & machinery |
| Goods lost, stolen, destroyed, written off, free samples | 17(5)(h) | Always blocked |
| Gifts to a person exceeding value threshold | 17(5)(h) | Blocked |
| Tax paid under Sec 74 (fraud), 129, 130 | 17(5)(i) | Always blocked |
Sec 17(5)(b) exceptions apply where the inward supply is used to make an outward taxable supply of the same category, or where providing it to employees is obligatory under any law in force.
A car used for MD/HR/general corporate travel is blocked under 17(5)(a); a delivery truck or a taxi-fleet vehicle is allowed. Similarly, employee canteen food is blocked unless providing it is obligatory under a law such as the Factories Act. When in doubt, treat it as blocked and confirm with a practitioner.
ITC Time Limit — The 30 November Deadline
ITC for a financial year must be claimed by the earlier of: 30 November of the following financial year (the due date of the October GSTR-3B), or the date you actually file the annual return (GSTR-9) for that year. Miss it and the credit lapses permanently.
Deadline for FY 2025-26 ITC
180-day payment reversal
Section 16(5)/16(6) (inserted by the Finance (No. 2) Act 2024, effective 27 September 2024) gave a one-time retrospective relaxation for FYs 2017-18 to 2020-21 and for revoked registrations — but for current years the ordinary 30 November limit under Section 16(4) applies.
ITC Reversals You Must Track
Even validly claimed ITC may need to be reversed later. Track these and adjust in GSTR-3B.
- 180-day rule (Rule 37) — reverse ITC if supplier invoice unpaid within 180 days; re-claim once paid
- Rule 42 — proportionate reversal of common input/input-service ITC used for exempt supplies
- Rule 43 — proportionate reversal of common capital-goods ITC used for exempt supplies
- Blocked-credit reversal — any Section 17(5) portion claimed in error
- GSTR-2B mismatch — reverse ITC not appearing in GSTR-2B
- Annual reconciliation — reconcile ITC availed vs GSTR-2B and report in GSTR-9
GST 2.0 (effective 22 September 2025) rationalised output rates into a two-slab 5%/18% structure plus a 40% demerit rate, but did not change the ITC framework — Section 16 conditions, GSTR-2B matching and Section 17(5) blocks all continue exactly as before.
Want a clean ITC reconciliation before you file GSTR-9?
Get ITC Reconciliation →- Act & notifications: gst.gov.in
- CBIC: cbic-gst.gov.in
- ITC conditions & time limit: Section 16, CGST Act 2017
- Blocked credits: Section 17(5), CGST Act 2017
- 180-day rule: Rule 37; proportionate reversal: Rules 42 & 43, CGST Rules
- Sec 16(5)/16(6) relief: Finance (No. 2) Act 2024 (eff. 27 Sep 2024)
Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position with the official source before you act on it.