What is ITC ? How to claim ITC ?

 Input Tax Credit (ITC) is a benefit under the Goods and Services Tax (GST) Act that allows a registered business to reduce the tax it has already paid on purchases from the tax it needs to pay on sales.

👉 In simple words:

If you pay GST while buying goods or services for your business, you can claim that GST as credit and deduct it from the GST you need to pay to the government.

Example of ITC

Particulars

Amount

GST paid on purchases

₹1,000

GST collected on sales

₹1,500

GST payable to government

₹500

Formula:

Output GST – Input GST = GST Payable

Conditions to Claim ITC

To claim ITC under GST, the following conditions must be fulfilled:

You must have a valid tax invoice or debit note.

Goods or services must be received by you.

Supplier must have filed their GST return (invoice should appear in GSTR‑2B).

You must file your GST return (usually GSTR‑3B).

The GST must be paid to the government by the supplier.

Payment to the supplier must be made within 180 days.

How to Claim ITC (Step-by-Step)

1️⃣ Login to the GST portal

👉 Goods and Services Tax Network (GSTN) official website.

2️⃣ Go to Returns Dashboard

3️⃣ Check your GSTR-2B

Verify purchase invoices uploaded by suppliers.

4️⃣ Calculate eligible ITC

Remove blocked ITC (like personal expenses, motor vehicles etc.).

5️⃣ Open GSTR-3B

6️⃣ Enter ITC details in Table 4 (Eligible ITC)

7️⃣ Submit and file GSTR-3B

After filing, the ITC is adjusted against your GST liability.

ITC Cannot Be Claimed On (Blocked ITC)

Some common cases where ITC is not allowed:

Personal expenses

Motor vehicles (with some exceptions)

Food & beverages

Club membership

Goods lost, stolen, or destroyed


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