Record a purchase and claim input tax credit
The GST you pay on purchases for your business can be set off against the GST you collect on sales. That set-off is input tax credit (ITC), and it comes with conditions.
The conditions for ITC
You can claim ITC only when [CGST Act 2017, section 16(2)]:
- you hold the tax invoice or debit note;
- the invoice appears in your GSTR-2B, the statement built from your suppliers' GSTR-1 [section 16(2)(aa)];
- you have received the goods or services;
- the supplier has paid the tax to the government and filed its return.
Pay the supplier within 180 days
If you do not pay the supplier within 180 days of the invoice date, the credit has to be added back to your tax, and can be claimed again once you pay [CGST Act 2017, section 16(2), second proviso].
Time limit and blocked credits
Credit for a year must be claimed by 30 November of the next year, or the date the annual return is filed if that is earlier [CGST Act 2017, section 16(4)]. Some purchases never give credit, for example food and beverages and goods for personal use, with listed exceptions [CGST Act 2017, section 17(5)].
Worked example
You buy 10 fans at Rs 1,400 each from a registered vendor, GST 18%: taxable value Rs 14,000, GST Rs 2,520. If the conditions above are met, Rs 2,520 is your ITC.
Practice task
Questions
What is GSTR-2B?
A monthly statement on the GST portal, built from what your suppliers report in their GSTR-1. It shows which purchase invoices you can claim credit on.
Reviewed: 7 Nov 2026. This is general information, not advice from a chartered accountant. Rates and rules change; check the source named in brackets.