GSTR-3B › ITC eligibility

Which input tax credit can you claim?

A purchase bill with GST does not by itself give you credit. Section 16 of the CGST Act sets conditions, and section 17(5) blocks some credit altogether. Check them before you fill table 4.

The conditions (section 16)

1. You have the tax invoice or debit note.
2. You have received the goods or services.
3. The bill appears in your GSTR-2B (section 16(2)(aa), from 1 January 2022). If the supplier has not reported it in their GSTR-1, wait until it shows.
4. The supplier has paid the tax, and you have filed your return.
5. You claim it within the time limit: by 30 November after the end of the financial year, or the date of your annual return if earlier (section 16(4)).

Credit you must reverse

• Not paid within 180 days of the bill date (Rule 37): reverse the credit, with interest; take it again once you pay.
• Supplier did not file GSTR-3B for the period by 30 September after the year (Rule 37A): reverse it; re-claim after they file.
• Credit for exempt or personal use (Rules 42, 43) and blocked credit (section 17(5)): show it in 4(B)(1).

Blocked credit: section 17(5) in short

• Motor vehicles for up to 13 people (including the driver), except when you deal in them, transport passengers, run a driving school or transport goods, and their repairs and insurance.
• Food and drinks, outdoor catering, beauty treatment, health services, cosmetic surgery, club and gym memberships, rent-a-cab, life and health insurance, and travel for employees on holiday, unless the law requires you to give it to employees or you sell the same kind of service.
• Building a building or other immovable property on your own account (other than plant and machinery), including works contracts for it.
• Goods lost, stolen, destroyed, written off, or given away as gifts or free samples.
• Tax paid on composition purchases, and tax paid after demands for fraud.

The list has exceptions; read section 17(5) or ask your accountant for anything large.

Matching with GSTR-2B

Use the free GSTR-2B matcher to compare the GSTR-2B file from the portal with your saved purchase bills: it lists bills missing from 2B, bills with a different amount, and suppliers who have not filed. Claim in table 4(A)(5) only the credit that is both in your books and in GSTR-2B.