GST Input Tax Credit

GST is an indirect tax imposed on goods and services based on the principle of value addition. Therefore, the supply of tax is based on the value added in each phase of the supply chain, unless the product or service reaches the final consumer. In such tax systems, to deny the tax cascading effect of tax, there is an instrument for the set of taxes paid on the purchase of raw materials, consumables, plants and machinery, equipment, services etc., for the manufacture or use Are used. Supply of goods and services. This element, used to offset tax liability, is called input tax credit.

LEDGERS – Input Tax Credit Connection
The LEDGERS supports the intuitive matching and reconciliation of the input tax credits on the GST software scale. LEDGERS input tax credit reconciliation tool can sync GSTR-2A data with GSTR portal to get data, prepare data for matching and reconciliation with purchase data.

For further action, the purchase does not match the GSTR-2A data for the flag, such as sending a reminder to the supplier or updating the purchase data and much more.

With LEDGERS, you can be assured that all input tax credits payable to your business have been received. A well-organized input tax credit reconciliation process will help you reduce your GST payout every month, make purchases effective and increase profits.

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Input tax credits
Under GST, every person who has registered GST in the supply chain is involved in the process of controlling, collecting GST and withdrawing the collected amount. However, to avoid double taxation and cascading effects of tax, the input tax credit is provided as a means of setting tax paid on the purchase of raw materials, consumables, goods or services, which are the goods or services Was used in construction and supply and sale. . Using the input tax credit mechanism, are able to achieve neutrality in business tax incidents and ensure that such input tax elements do not enter the cost of supply or production of goods and services.

Eligibility to claim input tax credits
The input tax credit can only be claimed by a person with GST registration and is based on the appropriate documents and filing GSTR-2 returns. In order to claim input tax credit, the taxpayer must meet the following documentary requirements.

An invoice issued by the supplier in accordance with the GST rules for the invoice; Or
A debit note issued by the supplier; Or
Entry bill or any such document; Or
Any document issued by an ISD invoice or ISD credit note or input service distributor.
In addition, the following conditions also apply to claim input tax credit:

The taxpayer is in possession of invoice or debit note issued by a registered supplier or other tax payment documents.
The taxpayer has received goods and / or services.
Taxes imposed in connection with supply have actually been paid through the use of cash or available input tax credits in the appropriate government account.
The taxpayer has recorded the required GST filing.
Goods and services not eligible for input tax credit
Under the GST, the input tax credit is not available in relation to the following goods or services:

Except motor vehicles, when they are supplied during business or used to provide taxable services such as:
Transportation of passengers
Transport of goods
Providing driving, flipping, navigational training to such vehicles
Further supply of such vehicles or vehicles
Supply of goods and / or services in relation to food and beverages, outdoor catering, beauty treatments, health services, cosmetic and plastic surgery, where inward supply of goods or services of a particular category is used by a registered person Outward taxable supply of same category service
A club, health and fitness center membership
A cab, life insurance, health insurance on rent, except that it is legally mandatory to provide such services to an employer
Travel benefits such as vacation or home travel concession given to employees on leave
Goods and / or services are acquired by the chief in building real estate, other than plant and machinery where this contract is an input service for supply of service
In addition to the goods and services, plants and machinery received by a taxable person to build a real estate on their own account, even when used in the business context
Taxes on goods and services paid under composition scheme
The goods and services used for personal consumption
Luggage lost, stolen, written or gifted or disposed of by free sample
Tax repaid after detecting fraud, willful misstation or suppression
Tax repaid for the release of confiscated or seized goods
Tax paid for the release of seized goods

Important Articles on Input Tax Credit

Items are not eligible

Not a list of eligible goods and services for input tax credit under GST. Input tax credit is not available for vehicle, insurance and personal consumption.

Input tax credit utilization

The Central Goods and Services Tax (Amendment) Act, 2018 has been effected from February 1, 2019 and as a result many changes have been made in the use of input tax credit.

Input tax credit refund

The process of claiming an input tax credit refund due to the inverted structure through the GST portal. Inverted tax structure refers to such a situation where tax input imposed on input is more than the taxes imposed on the supply.

Rule 42 and Rule 43 of CGST
Rule 42 and 43 of CGST rules are applicable for the claim of input tax, in which the supply is partly used for business purposes and partly for other purposes. In such cases, the taxpayer can not fully claim the input tax credit and part of the claim of input tax credit should be reversed.

Transfer of input tax credit

The process of transferring the input tax credit from one business to another through the GST portal. The GST input tax credit can be transferred by forming GST ITC-02.

ITC refund for export

The process of claiming input tax credit refund for export through GST portal. In order to claim the return of input tax credits on exports, the taxpayer has to pay GST RFD-01A form on GST portal.

Input Tax Credit for Imports

Input tax credit for imports is provided for importers with GST registrations. IGST and GST indemnity cess apply to goods imported in India.

Input Tax Credit for Imports

Enter your GST registration application online through Support the GST registration process, eligibility and necessary documents. Institutions with an annual revenue exceeding 20 lakh rupees will have to get GST registration. Complete your GST registration online in less than 5 business days.

Input Tax Credit for Imports

Return GST online file through with GST Expert Support You can file GSTR-1, GSTR-2, GSTR-3 and GSTR-4 online through In addition to filing GST Returns, you can also issue GST invoices and record purchases on the LEDguard so that they can automatically submit GST Returns.


GSTR-9 or GST annual return filing for taxpayers with a turnover of upto Rs.25 lakhs per annum.

  • Turnover less than Rs.25 lakhs
  • GSTR-9 Filing
  • Personalized GST Accountant

GSTR-9 or GST annual return filing for regular taxpayers not requiring GST Audit.

  • Turnover less than Rs.2 crores
  • GSTR-9 Filing
  • Personalized GST Accountant

GSTR-9 or GST annual return filing for regular taxpayers requiring GST Audit.

  • Turnover more than Rs.2 crores
  • GSTR-9 Filing
  • GSTR-9C Filing
  • Personalized GST Accountant

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What is GST Input Tax?

The tax paid by the person having GST registrations on input tax Central Tax (CGST), State Tax (SGST), integrated tax (IGST) or supply of goods or services is a cess. GST input tax includes IGST imposed on imports of taxes and goods paid on the basis of reverse charge. However, the tax paid under the composition levy in the input tax is not included.

Can loss of input tax credit or damaged goods be claimed?

No, no person can take input tax credits in connection with lost, stolen, destroyed or written goods. Apart from this, input tax credits are not permitted in respect of goods given in the form of gifts or free samples.

Can GST given on the basis of reverse charge be considered as input tax?

Yes. The definition of input tax involves tax due under reverse charge.

What are the conditions for availing the input tax credit?

The following four conditions have to be completed by the taxable person registered to receive ITC: tax invoices or debit notes or other tax payment documents are in possession of which can be determined; He has received goods or services or both; The supplier has actually paid the taxes imposed for supply.

Taxpayers are in possession of tax invoices or debit notes or other tax payment documents which can be prescribed.
The taxpayer has received goods or services or both.
The supplier has actually paid the tax imposed on the government in connection with supply.
Taxpayer has filed GST Return

Can a person take input tax credit without paying the invoice?

Yes, the recipient can take the input tax credit. However, the taxpayer will have to consider this along with taxes as well as 180 days from the date of issue of the challan. This condition is not applicable, where tax is payable on reverse charge basis.

What is the time limit for availing the GST Input Tax Credit?

A registered person can not take the input tax credit in respect of any invoice or debit note for supply of goods or services after the due date for presenting GST annual returns. If annual return is filed before the due date, then no changes can be made after filing GST annual return.

Participate how to take advantage of ITC on the goods or services used for partial business?

Only the inputs of goods or services responsible for the purpose of the business can be taken by the tax credited person. The method of calculating eligible input tax credits has been provided in GST rules.

What happens in the event of a mismatch during an invoice?

In the case of mismatch, the supplier and the recipient will be updated about the mismatch. If the mismatch is not corrected then the amount will be added to the recipient’s output obligation in lieu of that month, for which month the discrepancy is communicated, for that month.

Is input tax credits allowed only after matching?

No, the input tax credit is provisionally allowed for two months. Details of the supply are matched by the system and the discrepancies are made to the supplier and receiver concerned. If the mismatch continues, the ITC taken will be reversed by itself.

Can provisional input tax credit be used for GST payments?

No, the provisionally permitted input tax credit can be used to pay self-assessment output returns.

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