Input Tax Credit under GST – Important Points

With the surge in litigation surrounding the incorrect availment of Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime, it’s imperative for GST registered buyers to adhere to certain guidelines. This article outlines essential pointers that buyers must keep in mind while availing ITC to ensure compliance and mitigate the risk of disputes and penalties.

Possession of a tax invoice or debit note:
Buyer must have possession of tax invoice and debit note. Further please note that tax invoice or debit note should have the valid field as specified in Rule 46 and Rule 53 of i. e Name, GST No, Place of supply, HSN, GST rate, invoice no not exceeding 16 digit and many more. ITC of IGST paid on import of goods cab be claimed as ITC basis Bill of entry.

ITC should be available in GSTR 2B:
Details has been furnished by supplier in GSTR 1 and same should be available in GSTR 2B of buyer.

Received of good and services:
Buyer must have received the good and services. If the goods are received in instalments, ITC can be availed when last lots or instalment is received.

Payment of tax by supplier:
Tax has been actually paid by supplier and GSTR 3B has also been furnished by supplier.

Input tax credit should not be restricted u/s 38:
ITC should not available basis various scenario as specified in section 38 of CGST Act i.e. continuous default in payment of tax by supplier, tax shown by supplier in GSTR 1 is more that tax paid in GSTR 3B etc. supplier has availed the excess ITC etc.

Payment to supplier within 180 days:
Payment to supplier should be made within180 days from the date of invoice. If payment is not made within 180 days, ITC shouldbe reversed along with interest. However, ITC can be re-availed once the payment tosupplier is made. Further, please note that there is no-time limit for re-availment of ITConce payment is made to supplier.

Due date for Availment of ITC:
Time limit to avail the ITC against invoice or debit note should be earlier of 30
November of next financial year or due date of filing the Annual return for that financial year. No ITC can be claimed beyond aforesaid dates.

Depreciation on GST portion:
No ITC will be allowed if depreciation is claimed on GST component of capital good purchased.

Blocked credit:
There are certain items that are not eligible for availment the ITC u/s17(5) of CGST Act i.e. staff welfare expenses, rent a cab services, health insurance ofemployee, membership of health & fitness center, tax has been paid under composition scheme etc.

“Finance Act, 2025: 7 Key Amendments That Will Impact You”

The Finance Act, 2025 brings significant amendments to the CGST, IGST, and Income-tax Acts.

The most discussed change is the clarification of Input Service Distributor (ISD) provisions — enabling ISDs to distribute Input Tax Credit (ITC) even for reverse charge mechanism (RCM) supplies. This eliminates ambiguity and ensures seamless inter-branch credit flow.

Other noteworthy updates include:

  • Expansion of “local authority” definitions for administrative clarity.
  • Streamlined GST refund and compliance processes.
  • Strengthened provisions for digital audit trails in income-tax administration.

For corporates and consultants, this Act signals the government’s emphasis on data consistency, credit transparency, and reduced litigation — a move aligning tax systems with digital India’s ethos.

“GST 2.0 Is Here: How the 2025 Reforms Will Transform Indian Businesses”

The 56th GST Council Meeting (September 2025) unveiled what is being called “GST 2.0” — a long-awaited reform to simplify India’s indirect tax system.

The core highlights:

  • A three-rate structure: 5%, 18%, and 40% (luxury/sin goods).
  • Simplified compliance for MSMEs, including quarterly returns with auto-populated ITC.
  • Revised MRP guidelines effective September 22, 2025.
  • Real-time credit reconciliation under the GST Invoice Management System.

For small taxpayers, GST 2.0 is a breath of relief — with reduced filing frequency, automated reconciliation, and less manual intervention. Businesses holding unsold stock before September must revise MRPs in line with new slabs.

“Income-tax Act, 2025: What Every Taxpayer Must Know Before April 2026”

The Income-tax Act, 2025, as announced by the Direct Taxes Committee (DTC) of ICAI, marks a generational shift in India’s tax framework. Slated to come into force from 1st April 2026, this reform aligns India’s direct taxation with modern compliance, digital governance, and international best practices.

The DTC’s publication, “Income-tax Act, 2025 including Tabular Mapping vis-à-vis the Income-tax Act, 1961”, helps taxpayers and professionals transition smoothly from the 1961 framework. The new Act aims to simplify compliance, reduce litigation, and adopt a uniform digital reporting ecosystem.

Some key expected highlights include:

  • Rationalized slab rates and deductions: aligning with the government’s push toward a simplified new tax regime.
  • Streamlined tax audit and reporting: leveraging the revised Guidance Note under Section 44AB for AI-enabled compliance checks.
  • Digital-first administration: all returns, appeals, and notices to be digitally traceable under e-assessment provisions.

For professionals, the biggest advantage lies in predictability — a move from interpretative complexity to codified clarity. As April 2026 approaches, businesses must start gap assessments of internal systems to align with new audit thresholds and disclosure formats.