GST Input Tax Credit – List of expenses on which ITC cannot be claimed

Input Tax Credit means reducing the taxes paid on inputs from taxes to be paid on output.

⮚Output tax is a tax charged on sales

⮚Input tax is the tax paid on purchases


⮚At the time of buying any product/availing any service, we pay tax on it.

⮚At the time of sale, we charge tax.

⮚Now we adjust input tax (Tax paid at the time of purchase) against output tax (Tax collected at the time of sale)

⮚After adjustment ITC we pay the balance liability of tax to the Govt.

⮚This Mechanism is called Utilization of ITC.


Eligibility and Conditions for taking ITC

Enabling Sec 16


Every Registered person shall be entitled to take credit of goods or services which are used or intended to be used for business.

Time Limit

ITC must be claimed earlier of the following

a)Furnishing of annual return or

a)Due date of filing the monthly return for the next financial year’s Sep month.


Enabling Sec 16


1.One must be a registered taxable person.

2.One can claim Input Tax Credit only if the goods and services received is used for business purposes.

3.Input Tax Credit can be claimed on exports/zero-rated supplies and are taxable.

4.For a registered taxable person, if the constitution changes due to merger, sale or transfer of business, then the Input Tax Credit which is unused shall be transferred to the merged, sold or transferred business.

5.One can credit the Input Tax Credit in his Electronic Credit Ledger in a provisional manner on the common portal as prescribed in model GST law.

6.Supporting documents – debit note, tax invoice, supplementary invoice, are needed to claim the Input Tax Credit.

7.All GST returns prescribed under the act needs to be filed.


Blocked Credit – List of expenses on which ITC cannot be claimed

We have discussed a lot more about Input Tax credit and the list of items on which ITC cannot be claimed in the attached report here. 

Download the Report Here




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