What is Input Tax Credit (ITC) in GST?

⚡ Short answerInput Tax Credit (ITC) lets a GST-registered business reduce the GST it owes on sales by the GST it already paid on business purchases. You can claim ITC only for invoices that appear in your auto-drafted GSTR-2B, where the supplier has paid the tax, and within the time limit (generally 30 November of the following year).

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How ITC works

If you collected ₹18,000 GST on sales and paid ₹10,000 GST on purchases, you deposit only the ₹8,000 difference. ITC prevents tax-on-tax across the supply chain.

Conditions and blocked credits

ITC requires a valid tax invoice, receipt of goods/services, the supplier's tax payment (visible in GSTR-2B), and the credit not being blocked under Section 17(5) — which bars ITC on motor cars, personal consumption, club memberships and a few other items.

Related questions

Can I claim ITC if the supplier hasn't filed their return?

Generally no. ITC is restricted to invoices reflected in your GSTR-2B, which depends on the supplier filing GSTR-1 and paying tax. Reconcile before claiming to avoid reversal with interest.

Related reading

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General information for AY 2026-27, not professional advice. Rules change with each Finance Act / notification and depend on your facts — verify with a licensed CA or advocate before acting.