Input Tax Credit

πŸ“˜ Input Tax Credit (ITC) Under GST – A Complete Guide

β€” Expert Advisory by Hemant Consulting

At Hemant Consulting, we specialize in providing compliance-driven GST solutions tailored for businesses, startups, consultants, and service providers. One of the most common and crucial areas where businesses face confusion is Input Tax Credit (ITC) under the GST regime. Here’s a clear, practical explanation to help you claim ITC correctly and avoid unwanted notices or disallowances.

βœ… What is Input Tax Credit (ITC)?

Input Tax Credit (ITC) allows businesses to reduce the tax they pay on output (sales) by claiming a credit for the tax they have already paid on inputs (purchases and expenses).
In simple terms:
GST paid on purchases = Credit you can use to pay your GST liability.

πŸ“œ Legal Basis: Section 16 of the CGST Act, 2017


βœ… Who Can Claim ITC?

You can claim ITC if:
  1. You are a registered taxpayer under GST.
  2. You use the goods/services for business purposes.
  3. You have valid tax invoices from a registered supplier.

πŸ“Œ Conditions to Claim ITC (As per Law):

To legally avail ITC, the following conditions must all be satisfied:
Condition
Requirement
πŸ“„ Invoice
You must have a proper tax invoice or debit note.
🚚 Receipt of Goods/Services
You must have actually received the goods/services.
πŸ’Έ Tax Paid to Government
Supplier must have paid the GST collected to the government.
πŸ“ GSTR Filing
You must file monthly GST return (GSTR-3B).
⏳ Time Limit
ITC must be claimed by 30th Nov of next FY or before filing the Annual Returnβ€”whichever is earlier.

🚫 When ITC is NOT Allowed?

Here are some key ineligible ITC items:
Item
ITC Status
Motor vehicles for personal use
❌ Not Allowed
Food, beverages, club & gym memberships
❌ Not Allowed
Works contract for construction of immovable property
❌ Not Allowed
Personal use goods/services
❌ Not Allowed
Goods lost, stolen, written off
❌ Not Allowed

🧾 Real-World Examples (By Hemant Consulting)

Transaction
ITC Status
Office furniture purchase with GST invoice
βœ… Allowed
Hotel stay during official client visit
βœ… Allowed (if for business use)
Restaurant bill for birthday party
❌ Not Allowed
Company car bought for director’s use
❌ Not Allowed

πŸ’Ό Hemant Consulting’s Specialization in ITC

At Hemant Consulting, we assist businesses in:
βœ… Identifying eligible and ineligible ITC to maximize claims
βœ… Verifying supplier compliance to avoid ITC mismatch
βœ… Monthly GSTR-2B reconciliation
βœ… Resolving ITC-related notices from the department
βœ… Advising on ITC structuring for new business models
πŸ›‘οΈ Our goal is to help you protect your working capital while staying 100% GST compliant.

πŸ“£ Final Words

Correctly claiming Input Tax Credit is not just about saving taxβ€”it’s about avoiding penalties, maintaining liquidity, and being audit-ready. Let Hemant Consulting be your partner in smooth, efficient GST compliance.

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