Input Tax Credit in GST - Checklist

Last udpated: Jan. 2, 2018, 8:44 p.m.

Having an expense invoice is not enough to claim input tax credit under GST. Expense tax invoice is only one requirement.

To get the benefits of claiming ITC on purchases you need to have proper documents and also make sure your supplier is compliant with GST.

Goods and Services tax has its own benefits. Now even a trader can claim input tax credit on services received by him. For example under earlier VAT laws, ITC for service such as audit fee, accounting services was not available.

Checklist for claiming input tax credit (ITC)

  • Tax invoice
  • Compliance by supplier
  • Tax setoff
  • Payment to supplier

Tax invoice details for availing ITC

To claim ITC, tax invoice should be prepared as per rules.

Tax invoice should contain GSTIN of recipient. If you are purchasing any goods or services, make sure that tax invoice contains your GST number.

If seller/supplier is not known to you or is not reliable, make sure to verify his GST details.

Preserve a hard or soft copy of tax invoice for your future records.

Compliance by seller/supplier

Your supplier/seller has to file his returns.

If seller/supplier does not file his GSTR-1 or do not include your invoice in his return, you will not be able to claim ITC.

Though you can provide details in GSTR-2 but again if he rejects it, you will be missed from claiming ITC benefits.

Make sure to check GST compliance rating, whenever you deal with a new seller.

Every month check your GSTR-2A data properly to make sure all your expenses invoices are uploaded.

Seller has to pay tax to government. Whatever tax your supplier has collected from you, he has to pay it to government. It is obvious that if tax is not remitted, he will not be able to file his returns.

Tax setoff

This will not prevent you from taking input tax credit but before filing your return make sure to calculate your liability by correctly offsetting taxes.

As a consultant we normally provide details of tax liability to client before filing return. We should make sure that we have calculated tax liability correctly.

We can setoff IGST with CGST and SGST, similarly CGST and SGST can be setoff with IGST.

But CGST and SGST cannot be setoff against each other.

Payment to supplier

Make sure to pay to your seller/supplier within 180 days to claim input tax credit.

As per provisions and rules of GST Act, if you do not pay within 180 days to your supplier, you have to reverse your ITC availed on purchase.


Maintaining proper records and compliance with tax laws is as important as running your core business.

GST rates are in range of 0% to 28%, missing or taking wrong input tax credit can have serious impact on margins.

Consider a situation where profit margin is 10%, missing an input credit of 28% can make margins negative.

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Posted by Pulkit Sharma under GST

A Chartered Accountant by qualification. Love to code and share knowledge. On a mission to create the largest knowledge library for finance and taxation professionals. Check Profile

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