Input Tax Credit: The Rules for Claiming It

ITC conditions and deadlines have been amended multiple times and can change again. This article is for general information and does not constitute tax advice.

The Four Conditions

Under Section 16(2) of the CGST Act, all of the following have to be satisfied: a valid tax invoice or debit note in hand; actual receipt of the goods or services (for instalment deliveries, credit is claimed only after the final instalment); the tax actually reflected in the recipient’s GSTR-2B, tying credit to what the supplier has reported; and GSTR-3B filed by the recipient for that period.

The 180-Day Payment Rule

The recipient has to pay the supplier the full invoice value (GST included) within 180 days of the invoice date. A partial payment doesn’t satisfy this. Missing the 180 days means reversing whatever credit was claimed, with interest. Once paid, even well after 180 days, the credit can be re-claimed with no separate time limit specifically on that re-claim.

The 30 November Deadline

Section 16(4) sets an independent cutoff: ITC for a financial year has to be claimed by the earlier of 30 November of the following financial year, or the date GSTR-9 for that year is actually filed. Miss it, and the credit is permanently gone. The practical trap: filing GSTR-9 ahead of 30 November can close the ITC window early, sometimes weeks before the calendar deadline.

The Depreciation Restriction

Under Section 16(3), if depreciation has been claimed on the tax component of a capital good’s cost under the Income Tax Act, GST credit on that same tax component is disallowed. It’s one or the other.