GST Input Tax Credit (ITC): Rules, Reversals & Common Mistakes

Input Tax Credit (ITC) lets you offset the GST you paid on purchases against the GST you collect on sales — but the rules are strict, and errors are costly.

Conditions to claim ITC

• You hold a valid tax invoice
• You received the goods/services
• The supplier actually paid the tax and filed returns
• The credit appears in your GSTR-2B

Blocked credits (Section 17(5))

ITC is not allowed on certain items — personal-use motor vehicles, food & beverages, club memberships, and goods used for personal consumption.

Reversals

If you don't pay a supplier within 180 days, or use inputs for exempt supplies, ITC must be reversed with interest.

The big trap: reconciliation

ITC is now largely locked to GSTR-2B. If a supplier doesn't upload the invoice, you lose the credit — so vendor compliance matters.

Statura reconciles your ITC monthly and recovers missed credits.