Find answers to your questions about our CMA services
Input tax means the central tax (CGST), State tax (SGST), integrated tax (IGST) or Union territory tax (UTGST) charged on supply of goods or services or both made to a registered person. It also includes tax paid on reverse charge basis and integrated tax charged on import of goods. It does not include tax paid under composition levy.
Input Tax Credit means the credit of input tax on the supplies of goods or services or both received by a registered person.
The definition of input tax includes the tax payable under the reverse charge.
Yes, it includes taxes paid on input goods, input services and capital goods. Credit of tax paid on capital goods is permitted to be availed in one instalment.
A registered person is entitled to take credit of input tax charged on supply of goods or services or both to him which are used or intended to be used in the course or furtherance of business, subject to other conditions and restrictions.
Following four conditions are to be satisfied by the registered taxable person for obtaining ITC:
• he is in possession of tax invoice or debit note or such other tax paying documents (such as bill of entry or any other document prescribed under the Customs Act, ISD invoice as prescribed in Rule 36(1) of the CGST Rules).
• he has received the goods or services or both;
• the supplier has actually paid the tax charged in respect of the supply to the government; and
• he has furnished the return under section
• Communication of Details (The 2B Rule): The details of the invoice/debit note must have been furnished by the supplier in their GSTR-1 and communicated to the recipient in GSTR-2B. (ITC cannot be claimed if it is not “reflected” in 2B).
If the said document does not contain all the specified particulars but contains the details of the amount of tax charged, description of goods or services, total value of supply of goods or services or both, GSTIN of the supplier and recipient and place of supply in case of inter-State supply, input tax credit may be availed by such registered person. (Proviso to Rule 36(2) of CGST Rules, 2018 inserted vide Notification no.39/2018-Central Tax issued dated 04.09.18)
The registered person shall be entitled to the credit only upon receipt of the last lot or installment.
Yes, the recipient can take ITC. But he is required to pay the consideration along with tax within 180 days from the date of issue of invoice. This condition is not applicable where tax is payable on reverse charge basis.
The amount of ITC would be added to output tax liability of the person. He would also be required to pay interest under Section 50. However, he can take ITC again on payment of consideration and tax.
The recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.
Under Rule 37A (introduced recently), if a supplier fails to file their GSTR-3B by a specified date (usually September following the FY), the recipient must also reverse the ITC, even if they have paid the supplier.
The time limit specified in section 16(4) shall not apply to a claim for re-availing of any credit, in accordance with the provisions of the Act or these rules that had been reversed earlier.
The value of supplies made without consideration as specified in Schedule I shall be deemed to have been paid for the purposes of the second proviso to section 16(2). (Proviso to Rule 37 of the CGST Rules, 2017)
The fact that a registered person is supplying goods to an unregistered or exempted person has no consequence on availment of ITC by the supplier.
In case of unregistered dealer, recipient will pay tax on reverse charge basis. He can get the ITC provided he fulfills other conditions as mentioned in section 16 of the CGST Act, 2017. In case of purchase from composition taxable person, the composition person cannot charge any tax and hence the question of availing ITC does not arise.
He needs to use input for furtherance of business and should fulfill the conditions mentioned in section 16 of CGST Act, 2017. The input should not fall within the negative list provided in section 17(5) of the CGST Act, 2017.
Value of supplies on account of any amount added in accordance with the provisions of section 15(2)(b) is deemed to have been paid for the purposes of the second proviso to section 16(2). Therefore, ITC is admissible. (Second Proviso to Rule 37 of CGST Rules, 2017)
It would be deemed that the registered person has received the goods when the goods have been delivered to a third party on the direction of such taxable person. So ITC will be available to the person on whose order the goods are delivered to third person.
It would be deemed that the registered person has received the services where the services are provided by the supplier to any person on the direction of and on account of such registered person. [Explanation clause to Section 16(2)(b) inserted vide CGST(Amendment) Act, 2018]
A registered person can take ITC for any invoice or debit note until the earlier of
• 30th November following the end of the financial year to which such invoice pertains.
• The date of furnishing the Annual Return (GSTR-9) for that financial year.
Example: For an invoice dated February 10, 2026 (FY 2025-26), the last date to claim ITC is November 30, 2026, unless the Annual Return for FY 25-26 is filed earlier.
The input tax credit shall not be allowed on the said tax component in respect of which depreciation has been claimed.
Detailed rules for reversal of ITC when the supplier is providing exempted and non-exempted supplies have been provided in ITC Rules.
ITC on rent-a-cab services is blocked under Section 17(5)(b)(i).
Exception: It is allowed only if it is obligatory for an employer to provide this to employees under any law (e.g., late-night transport for women employees under specific State Shops & Establishment Acts).
For a developer, ITC is available to pay output tax on the construction service. However, if the project is “residential,” the tax rate is usually 1% or 5% without ITC. For “commercial” projects, ITC is generally available. For a business building its own office, ITC is blocked.
Return Rules have already been notified. It is not possible to make exception for one sector
Input tax credit for rent-a-cab service is not available
Yes, except for the “Blocked Credit” list in Section 17(5). As of 2026, the list includes:
• Motor vehicles (with exceptions).
• Food, beverages, and outdoor catering.
• Memberships of clubs/gyms.
• Goods lost, stolen, or given as free samples.
• Construction of immovable property (other than plant and machinery).
No. ITC is blocked for motor vehicles meant for passenger transport with a seating capacity of less than 13 persons. Usage by directors is considered personal/administrative and does not qualify for the exceptions (which are: further supply, passenger transport, or driving school).
No, a person cannot take ITC with respect to goods lost, stolen, destroyed or written off. In addition, ITC with respect of goods given as gifts or free samples are also not allowed. [Section 17(5)(h) of CGST Act]
ITC on goods or services by a person for construction of immovable property, other than plant and machinery, is not allowed. Plant and machinery cover only apparatus, equipment, and machinery fixed to earth by foundation or structural support, and excludes land and building, among other things.
The input tax credit of goods or services or both attributable only to taxable supplies can be taken by registered person. The manner of calculation of eligible credit is provided in the CGST Rules.
No. Zero-rated supplies have been covered within taxable supplies for the purpose of allowing input tax credit. Moreover, IGST Act specifically allows availment of input tax credit for making zero rated supplies, notwithstanding that such supply may be exempt.
Input tax credit cannot be availed by a registered person in respect of any tax that has been paid in pursuance of any order where any demand has been confirmed in cases of evasion by reason of any fraud, willful misstatement or suppression of facts. (Rule 36(3) of the CGST Rules, 2017)
‘Exempt Supplies’ for the purpose means all supplies other than taxable and zero-rated supplies and specifically include the following:
• Supplies liable to tax under reverse charge mechanism;
• Transactions in securities;
• Sale of land; and
• Subject to Para 5(b) of Schedule II, sale of building
• Specific high-value actionable claims (like online gaming) have specific valuation rules but are generally treated as taxable, not exempt
However, the “value of exempt supply’’ shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule (Sale of Land / building). [The CGST (Amendment) Act, 2018]
The input tax credit of goods or services or both attributable only to the purpose of business can be taken by registered person. The manner of calculation of eligible credit is provided in rule 42 of the CGST rules.
A banking company or a financial institution including a non-banking financial company engaged in supply of specified services would either avail proportionate credit or avail 50% of the eligible input tax credit.
The option once exercised cannot be withdrawn in the same year. The restriction of 50% will not apply to the tax paid on supplies made by one registered person to another registered person having the same PAN.
50% of the eligible credit only can be taken. Thus, the credit of tax paid on inputs and input services used for non-business purposes should not be availed. Besides, ITC that are not eligible in terms of Section 17(5) should also not be availed. 50% of the remaining credit is admissible and can be availed.
Motor Vehicles for transportation of Goods: Input tax credit is admissible for motor vehicles meant for transport of goods.
Motor Vehicles for transportation of persons: Input tax credit on motor vehicles for transportation of persons having approved seating capacity of not more than 13 persons is not allowed except when they are used for making the following taxable supplies, namely: –
• further supply of such motor vehicles;
• transportation of passengers; or
• imparting training on driving such motor vehicles
The ITC on repairs, maintenance and general insurance of those motor vehicles is blocked if the ITC is blocked under Section 17(5)(a) of the CGST Act 2017.
Motor Vehicles for transportation of Goods: ITC on repairing, maintenance and insurance of motor vehicles for transportation of goods is admissible with no restrictions.
Motor Vehicles for transportation of persons: Thus, ITC on repairing, maintenance and insurance of motor vehicles for transportation of persons carrying more than 13 persons will be admissible. However, for motor vehicles for transportation of persons carrying up to 13 persons will be admissible only if it is used for transportation of passengers, further supply of such motor vehicles and imparting training on driving. [Section 17(5) (ab) as substituted vide the CGST (Amendment) Act, 2018]
No. An explanation clause has been inserted in section 17(3) of the CGST Act, 2017 explaining that the expression ‘‘value of exempt supply’’ shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule. (The CGST (Amendment) Act, 2017; Notification for implementation date is yet to be issued)
The credit attributable to non-business purpose will be equal to 5% of Common Credit. (Rule 42(j) of the CGST Rules, 2017).
Yes, subject to the condition that such construction of immovable property is not capitalized. [Explanation to section 17(5)(d) of CGST Act]
No. He can take input tax credit of tax paid only on goods and services imported by him.