GST
Input Tax Credit (ITC): how to claim every rupee you're owed
ITC is real money back on your purchases. Here's how it works and the simple habits that protect it.
Key takeaways
- ▸ ITC is the GST you paid on purchases, set off against GST you collect.
- ▸ You can only claim it if the purchase is recorded with the supplier's GSTIN.
- ▸ Reconcile against GSTR-2B so you claim exactly what's eligible.
- ▸ Unclaimed ITC is money left on the table.
Input Tax Credit is one of the most valuable — and most leaked — parts of GST. Get it right and you pay less tax every month. Ignore it and you quietly overpay.
What ITC actually is
When you buy goods or services for your business, you pay GST to your supplier. ITC lets you subtract that GST from the GST you collect on your sales, so you only pay the difference to the government. It's not a discount — it's tax you've already paid being credited back.
The conditions to claim
- The purchase must be for business use.
- You must have a valid tax invoice with the supplier's GSTIN.
- The supplier must have reported the invoice (it shows in your GSTR-2B).
- You must have recorded the purchase in your books.
The habit that protects your ITC
Record every purchase bill promptly, with the supplier's GSTIN and correct GST. Then reconcile against GSTR-2B each month — it shows which supplier invoices are actually reported. Anything missing, you chase the supplier before you file.
Where it leaks
- Cash purchases with no proper GST invoice — no claim.
- Bills entered late or not at all.
- Suppliers who don't file, so the invoice never appears in 2B.
- Personal expenses mixed in (not claimable).
Doing it without stress
MGH Books captures ITC on every recorded purchase and helps you reconcile against GSTR-2B, so you claim exactly what you're owed — no more, no less — and your 3B is clean.