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How to Claim Input Tax Credit (ITC) in GST — Step-by-Step

Updated: 3 June 2026  |  CGST Act  |  Section 16 & Section 17(5)

Claim ITC in GSTR-3B Table 4(A) — auto-populated from GSTR-2B. Conditions: valid invoice, goods received, tax paid by supplier, returns filed. Section 17(5) blocked credits (cars, food, construction, personal expenses) cannot be claimed. Reversal needed if supplier not paid within 180 days.
GSTR-2B
Auto-drafted ITC statement — generated 14th of every month. Match with purchase register before filing GSTR-3B.
ITC must appear in GSTR-2B (supplier filed GSTR-1). Invoice not in GSTR-2B = cannot claim ITC until supplier files. Section 17(5) blocks ITC on motor vehicles, food, club, construction.

ITC Claim Process — Steps

StepActionWhere
1Receive invoice from supplierYour books
2Check invoice in GSTR-2B (14th of next month)GST Portal
3Reconcile GSTR-2B with purchase registerExcel / accounting software
4Report eligible ITC in GSTR-3B Table 4(A)GSTR-3B
5Reverse ineligible ITC in Table 4(B)GSTR-3B
6Net ITC reduces output tax liabilityGSTR-3B
7Annual reconciliation in GSTR-9Annual return

ITC Conditions — Section 16 Checklist

ConditionRequirement
RegistrationMust be GST registered taxpayer
Valid invoiceTax invoice/debit note from registered supplier
Goods receivedActual receipt (for installments: final lot)
Tax paid by supplierSupplier must deposit tax with govt
Return filedGSTR-3B filed; ITC in GSTR-2B
Time limitBy Nov 30 / annual return due date (whichever earlier)
Business purposeUsed for taxable business supply

Frequently Asked Questions

What are the conditions to claim ITC under GST?
Conditions to claim Input Tax Credit (Section 16 CGST Act): (1) You must be a registered GST taxpayer. (2) You must hold a valid tax invoice or debit note issued by a registered supplier. (3) Goods or services must be received (for goods in lots — ITC only after final lot received). (4) Tax must have been actually paid to government by the supplier — if supplier defaults, buyer's ITC is reversed. (5) You must have filed GST returns (GSTR-3B). (6) Invoice must appear in GSTR-2B (auto-populated from supplier's GSTR-1). (7) ITC must be claimed within the due date: earlier of November 30 following end of FY or date of filing annual return for that FY. (8) Goods/services used for business purposes (blocked credit rules: Section 17(5) lists items where ITC not available).
How is ITC claimed in GSTR-3B?
ITC claim process in GSTR-3B: (1) GSTR-2B is auto-populated each month by the GST portal — shows all invoices uploaded by your suppliers. (2) You reconcile GSTR-2B with your purchase register — verify all invoices are correctly reflected. (3) In GSTR-3B (monthly/quarterly return): Table 4(A) — eligible ITC from GSTR-2B (auto-filled now). Table 4(B) — ineligible ITC to be reversed (blocked credit, non-business use). Table 4(D) — other ineligible ITC. (4) Net eligible ITC in Table 4(A) reduces your output tax liability. (5) File GSTR-3B by due date (20th/22nd/24th depending on turnover). Monthly filers: claim ITC each month. Quarterly filers (QRMP): ITC claimed quarterly in GSTR-3B. ITC utilization order: IGST first → CGST → SGST.
What is GSTR-2B and how does it help claim ITC?
GSTR-2B is a static auto-drafted Input Tax Credit statement generated monthly for each taxpayer. Generated on 14th of following month based on suppliers' GSTR-1/IFF filings. Shows: invoices uploaded by your suppliers (B2B), credit notes, debit notes, import of goods (ICEGATE). Bifurcated into: Eligible ITC (can claim), Ineligible ITC (blocked per Section 17(5) or reverse charge). Benefits: auto-populates Table 4(A) of GSTR-3B. Reduces manual errors. Helps track missing invoices (supplier hasn't filed). ITC Rule 36(4): You can provisionally claim ITC for invoices not in GSTR-2B — BUT only up to the limit prescribed (currently all ITC must be per GSTR-2B from Jan 2022 onwards). Reconciliation: match your purchase register with GSTR-2B monthly to catch discrepancies early.
What is ITC reversal and when is it required?
ITC reversal: when previously claimed ITC must be reversed (paid back): Rule 42 — ITC attributable to exempt supplies or non-business use must be reversed proportionally. Rule 43 — ITC on capital goods used partly for exempt/business and partly for taxable supply: 1/60th per month reversal for 5 years. Section 17(5) — blocked credit: ITC on motor vehicles, food, club memberships, personal expenses, construction of immovable property. Supplier non-payment: if supplier doesn't pay GST within 180 days and you've claimed ITC — you must reverse ITC + interest (Rule 37). If you don't pay supplier within 180 days: same — reverse ITC. Reversal done in Table 4(B) of GSTR-3B. On subsequent supplier payment: can re-claim reversed ITC. Annual reconciliation: GSTR-9 requires reconciliation of claimed ITC vs eligible ITC.
What is blocked ITC under Section 17(5)?
Section 17(5) blocked ITC — no credit allowed on: Motor vehicles (cars, bikes) if seating ≤ 13 persons (except: transport of persons as business, driving school, resale of vehicles). Food, beverages, outdoor catering, club memberships, health & fitness services. Construction of immovable property (own use). Works contract for construction of immovable property (own use). Travel benefits to employees (free or concessional). Life/health insurance (unless mandatory by law, or providing same as output service). Exceptions: ITC allowed if the same blocked category is your OUTPUT service. Example: restaurant claiming ITC on food for cooking (cooking is its business — NOT blocked). Hotel providing catering as part of event: can claim ITC on food. Businesses providing health insurance as part of CTC mandatorily (Factories Act): can claim. Always check Section 17(5)(a) to (h) before blocking ITC.

Related Pages

Input Tax Credit Guide Blocked Credit GST GSTR-3B Filing GST Reconciliation ITC on Capital Goods
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