Eligibility criteria to claim GST ITC - Fusion - WeRIndia

Eligibility criteria to claim GST ITC

Eligibility criteria to claim GST ITC

Input tax credit (ITC) allows the business people to claim input tax credit for the tax they paid to purchase the capital goods for their business use.

The business people can offset their Goods and Services tax (GST) to the extent of input tax paid by them.

The following are some eligible criteria to claim ITC:

  • In order to claim ITC, the buyer should have a valid tax invoice, debit note and any other specified document issued by a registered dealer.
  • The buyer should have received the goods or service. If he receives the goods or services in installments, then he can claim the ITC for the last installment.
  • The supplier must have paid the outstanding tax to the government on the purchases of buyers by way of cash or by claiming the ITC.
  • The supplier should have filed GST returns. That means if your supplier is GST compliant and has paid the tax collected from you to the government, then you can claim your input tax credit on your purchases.
  • The buyer should pay for the supplies he received within 180 days from the date of issuing the invoice. Failing which leads to increase in the output tax liability by adding the amount of credit if any availed by them. For partial payments, claim is allowed only for such proportionate payments.

However, the following cannot claim ITC:


  • If you buy capital goods for non-business purposes, then you cannot claim the input tax credit.
  • The capital goods that are used for manufacturing exempted goods are also not eligible.
  • Blocked credits under Section 17 (5) are not eligible for ITC.
  • Composition dealers cannot claim ITC.
  • If the buyer pays tax on reverse charge basis, then such purchases are not allowed for claim.

The following documents are essential to avail input tax credit:

  • Invoice, Bill of supply or debit note issued by the supplier
  • If the total bill amount is less than ₹200 or if the tax is paid by the buyer in reverse charge mechanism, then invoice or bill of supply is required.
  • Bill of entry of any other similar documents issued by the Customs Department is essential.

Image Reference: Taxheal

Leave a Reply

Your email address will not be published. Required fields are marked *