GST ITC Guide · FY 2025-26
How to Claim Input Tax Credit
in GST — Step by Step
The ITC claim process end to end: Section 16 conditions, accepting invoices in IMS, matching GSTR-2B, reporting in GSTR-3B Table 4(A), blocked credits and the 30 November deadline.
Updated for FY 2025-26 GST Expert Reviewed IMS & GSTR-2B Ready
Table 4(A)Where ITC is claimed
GSTR-2BAuto-drafted ITC
30 NovSection 16(4) deadline
180 daysPay-supplier rule
Quick Answer
You claim Input Tax Credit in GSTR-3B, Table 4(A) — now auto-populated and locked from your GSTR-2B. To be eligible under Section 16 you must hold a valid tax invoice, have received the goods/services, the supplier must have filed and paid the tax, and the invoice must appear in GSTR-2B (accepted in the Invoice Management System). You must pay the supplier within 180 days, and claim by 30 November following the financial year. Section 17(5) blocks credit on cars, food, construction and personal items.
Claimed in GSTR-3B 4(A)
Sourced from GSTR-2B
Deadline 30 Nov
Pay supplier 180 days
Section 16 & 16(2)
Conditions to Claim ITC
Every ITC claim must satisfy each of the following conditions under Section 16 of the CGST Act. Fail any one and the credit is not available (or must be reversed). See the full GST input tax credit rules.
| Condition | Requirement | Met? |
|---|---|---|
| Registration | You are a registered GST taxpayer | Required |
| Valid document | Tax invoice / debit note from a registered supplier | Required |
| Receipt | Goods or services actually received (for lots — after final lot) | Required |
| Tax paid & filed | Supplier has paid the tax and filed GSTR-1/GSTR-3B | Required |
| Appears in GSTR-2B | Invoice reflected in GSTR-2B (accepted in IMS) | Required |
| Return filed | You have filed your own GSTR-3B | Required |
| 180-day payment | Supplier paid within 180 days of invoice | Required |
| Time limit | Claimed by 30 Nov after FY / annual-return date, whichever earlier | Required |
| Business use | Not blocked under Section 17(5); used for taxable business supply | Or blocked |
Section 16(2) also requires the tax to have been actually paid to government; a supplier default can trigger reversal at the buyer's end.
The process
ITC Claim Process — Step by Step
From receiving an invoice to netting the credit against your output tax, here is the monthly ITC cycle every registered business follows.
Receive invoiceSupplier issues tax invoice
→
Act in IMSAccept / reject in Invoice Management System
→
Match GSTR-2BReconcile with purchase register
→
Claim in 4(A)Report eligible ITC in GSTR-3B
→
Net & fileITC offsets output tax; file by due date
| Step | Action | Where |
|---|---|---|
| 1 | Receive the tax invoice from your supplier | Your books |
| 2 | Supplier files GSTR-1 / IFF; invoice flows to your IMS | GST portal (IMS) |
| 3 | Accept, reject or keep pending in IMS | IMS dashboard |
| 4 | GSTR-2B is generated (14th of next month) from accepted records | GST portal |
| 5 | Reconcile GSTR-2B with your purchase register | Accounting software / Excel |
| 6 | Eligible ITC auto-fills GSTR-3B Table 4(A) | GSTR-3B |
| 7 | Reverse ineligible / blocked ITC in Table 4(B) | GSTR-3B |
| 8 | Net ITC reduces output tax; pay balance & file | GSTR-3B |
| 9 | Annual reconciliation of ITC claimed vs eligible | GSTR-9 |
Utilisation order of credit: IGST first, then CGST, then SGST (as permitted by law).
No action in IMS = deemed accepted
Since IMS became mandatory (1 April 2026), if you do not log in and reject a wrong or duplicate invoice, it is treated as accepted and flows into your GSTR-2B and GSTR-3B. GSTR-3B ITC is now auto-locked to GSTR-2B — you can no longer freely edit Table 4(A) upward. Review IMS before every filing.
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GSTR-2B, IMS & How ITC Auto-Fills
GSTR-2B is a static, auto-drafted ITC statement generated on the 14th of each month from your suppliers' GSTR-1/IFF filings and your IMS actions. It splits credit into eligible and ineligible (blocked or reverse-charge) and directly populates GSTR-3B Table 4(A).
- Accept — invoice matches your records; ITC is included in GSTR-2B.
- Reject — wrong or not yours; moves to the rejected section, no credit flows.
- Pending — deferred; stays in IMS and is not included in this GSTR-2B.
- An invoice the supplier never reported cannot be added through IMS — you must follow up with the supplier.
Worked example
How ITC Offsets Your Tax — ₹1,00,000 Purchase
Input tax paid on purchases
Purchase value₹1,00,000
GST @ 18% (ITC)₹18,000
Eligible ITC₹18,000
Output tax & net payable
Output GST on sales₹30,000
Less: ITC claimed₹18,000
Cash payable₹12,000
The ₹18,000 ITC is claimed in GSTR-3B Table 4(A) and set off against the ₹30,000 output liability, so only ₹12,000 is paid in cash — provided the invoice is in your GSTR-2B and the supplier is paid within 180 days.
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Talk to a GST Expert →Section 17(5)
Blocked Credit — Where ITC Is Not Allowed
Even when all Section 16 conditions are met, Section 17(5) blocks ITC on specific items. Reverse these in Table 4(B). See the detailed blocked credit guide.
| Item | ITC? | Note |
|---|---|---|
| Motor vehicles (seating ≤ 13) | Blocked | Unless resale, transport or driving-school business |
| Food, beverages, outdoor catering | Blocked | Allowed if it is your output supply |
| Club / health & fitness membership | Blocked | Personal-benefit category |
| Construction of immovable property (own use) | Blocked | Includes works-contract for own building |
| Employee travel benefits / free perks | Blocked | Unless obligatory under a law |
| Goods lost, stolen, destroyed or given as gifts | Blocked | No ITC on write-offs / free samples |
Exception: where the blocked category is your OUTPUT supply (e.g. a restaurant's food inputs, a car dealer's vehicles), ITC is allowed.
When you pay it back
ITC Reversal Rules
- Rule 37 — 180-day rule: if you do not pay the supplier within 180 days of the invoice, reverse the ITC with interest; re-claim it once you pay.
- Rule 42: proportionately reverse ITC attributable to exempt supplies or non-business use.
- Rule 43: ITC on capital goods used for exempt/taxable supply is reversed over 60 months (1/60th each month).
- Supplier default: if the supplier has not paid the tax to government, your matched ITC can be denied or reversed.
TaxClue Insight — watch the 30 November wall
Under Section 16(4), ITC for a financial year lapses permanently if not claimed by 30 November following that year (or the annual-return date, if earlier). Missed invoices, un-accepted IMS records and unreconciled GSTR-2B differences are the most common causes of lost credit — reconcile monthly, not annually.
Before you file
Monthly ITC Compliance Checklist
- Take action on every IMS record
- Generate & download GSTR-2B
- Match GSTR-2B with purchase register
- Confirm supplier filed GSTR-1
- Identify Section 17(5) blocked credit
- Reverse non-business / exempt ITC
- Track 180-day supplier payments
- Verify GSTR-3B Table 4(A) figure
- Reverse in Table 4(B) where needed
- Claim before the 30 Nov deadline
- Reconcile ITC in GSTR-9 annually
- Keep invoices & records on file
Government sourcesITC rules & returns: gst.gov.in · CBIC: cbic-gst.gov.in · ITC conditions & time limit: Section 16, CGST Act 2017 · Blocked credit: Section 17(5); reversals: Rules 37, 42, 43
People also ask
Frequently Asked Questions
Basics
What is the ITC claim process in GST?
The ITC claim process is: (1) receive a valid tax invoice from a registered supplier; (2) the supplier files GSTR-1 so the invoice flows to your Invoice Management System (IMS); (3) you accept the invoice in IMS; (4) GSTR-2B is generated on the 14th of the next month; (5) you reconcile GSTR-2B with your purchase register; (6) eligible ITC auto-populates GSTR-3B Table 4(A); (7) you reverse any blocked or ineligible ITC in Table 4(B); and (8) the net ITC reduces your output tax when you file GSTR-3B.
How do I claim ITC in GSTR-3B?
ITC is claimed in Table 4 of GSTR-3B. Table 4(A) shows eligible ITC, now auto-populated and locked from your GSTR-2B; Table 4(B) is used to reverse ineligible ITC (blocked credit under Section 17(5), non-business or exempt use); and Table 4(D) reports other details. The net eligible ITC reduces your output tax liability, so you pay only the balance in cash. File GSTR-3B by the due date (20th monthly, or 22nd/24th for QRMP quarterly filers).
What are the conditions to claim ITC under Section 16?
Under Section 16 you must: be a registered taxpayer; hold a valid tax invoice or debit note from a registered supplier; have actually received the goods or services; ensure the supplier has paid the tax and filed returns so the invoice appears in your GSTR-2B; have filed your own GSTR-3B; pay the supplier within 180 days; and claim within the Section 16(4) time limit. The goods/services must be used for taxable business supply and not fall under Section 17(5) blocked credit.
GSTR-2B & IMS
What is GSTR-2B and how does it help claim ITC?
GSTR-2B is a static, auto-drafted ITC statement generated on the 14th of each month from your suppliers' GSTR-1/IFF filings and your IMS actions. It lists B2B invoices, credit and debit notes and import data, split into eligible and ineligible ITC. It auto-populates GSTR-3B Table 4(A), reduces manual error, and flags missing invoices where a supplier has not filed. You should reconcile GSTR-2B with your purchase register every month.
What is the Invoice Management System (IMS)?
IMS is a GST-portal facility where invoices reported by your suppliers appear and you can accept, reject or keep them pending before they flow into GSTR-2B. It went live in October 2024 and became mandatory for regular taxpayers from 1 April 2026. Accepted invoices become eligible ITC in GSTR-2B; rejected ones give no credit; pending ones are deferred. Crucially, if you take no action, the invoice is deemed accepted.
Can I claim ITC if the invoice is not in GSTR-2B?
No. Since GSTR-3B ITC is auto-locked to GSTR-2B, you cannot claim ITC on an invoice that is not reflected there. If the invoice is missing because the supplier has not filed GSTR-1, follow up with the supplier to file it; the credit will then appear in a later GSTR-2B. IMS cannot add an invoice the supplier never reported.
Do I have to accept every invoice in IMS?
You should review each invoice. Accept genuine invoices, reject wrong or duplicate ones, and mark uncertain ones as pending. If you take no action at all, invoices are deemed accepted and flow into your GSTR-2B and GSTR-3B — including any errors — so active review before each filing protects you from wrong or excess ITC.
Time Limit
What is the time limit to claim ITC?
Under Section 16(4), ITC for a financial year must be claimed by the earlier of 30 November following the end of that financial year, or the date of filing the annual return (GSTR-9) for that year. For FY 2025-26, that generally means claiming in a GSTR-3B filed on or before 30 November 2026. After this cut-off the credit lapses permanently and cannot be recovered.
What is the 180-day payment rule for ITC?
If you claim ITC but do not pay your supplier (invoice value plus tax) within 180 days of the invoice date, you must reverse that ITC along with interest, under Rule 37. Once you subsequently pay the supplier, you can re-claim the reversed ITC. This rule ensures credit is only retained where the supplier is actually paid.
Blocked Credit
What is blocked ITC under Section 17(5)?
Section 17(5) lists items on which ITC is not allowed even if all other conditions are met: motor vehicles with seating capacity up to 13 persons (with exceptions), food and beverages, outdoor catering, club and health/fitness memberships, construction of immovable property for own use, works contracts for such construction, employee travel benefits and certain insurance. The block does not apply where the same category is your output supply — for example, a restaurant claiming ITC on food used in cooking.
Can I claim ITC on a car purchased for my business?
Generally no. ITC on motor vehicles with a seating capacity of up to 13 persons is blocked under Section 17(5), even if bought in the company name for business use. ITC is allowed only in specific cases: further supply (resale) of vehicles, passenger transport as a business, driving-school training, or goods-carriage vehicles, which are not covered by the block.
Is ITC available on GST paid under reverse charge?
Yes, generally. Where you pay GST under reverse charge (RCM) on eligible inward supplies used for business, that tax is available as ITC, provided the supply is not otherwise blocked under Section 17(5). You pay the RCM tax in cash and then claim the corresponding ITC in your GSTR-3B, subject to the usual conditions.
Reversal
What is ITC reversal and when is it required?
ITC reversal is paying back credit already claimed. It is required when: you do not pay the supplier within 180 days (Rule 37); ITC relates to exempt supplies or non-business use (Rule 42, proportionate); ITC on capital goods used partly for exempt supply is spread over 60 months (Rule 43); or the credit turns out to be blocked under Section 17(5). Reversals are reported in Table 4(B) of GSTR-3B, and eligible amounts can be re-claimed later once conditions are met.
What happens to my ITC if the supplier does not pay the tax?
If the supplier has not deposited the tax with the government, your ITC on that invoice can be denied or reversed, since Section 16(2) requires the tax to have actually been paid. This is why reconciling GSTR-2B and following up with defaulting suppliers matters — the buyer bears the risk of a supplier default.
Can I re-claim ITC that I had reversed earlier?
Yes, in the cases the law allows. For example, ITC reversed under the 180-day rule can be re-claimed once you pay the supplier. However, re-claiming remains subject to the overall Section 16(4) time limit — you cannot re-claim after the final 30 November / annual-return cut-off for that financial year has passed.
Did GST 2.0 change the ITC rules?
The GST 2.0 rationalisation effective 22 September 2025 restructured tax rates into a two-slab system (5% and 18%, with a 40% demerit rate) but did not change the core ITC mechanics. The Section 16 conditions, GSTR-2B/IMS matching, GSTR-3B Table 4 reporting, blocked credits under Section 17(5) and reversal rules continue to apply as before.
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