Question 1

What is Input Tax Credit (ITC) under GST?

Accepted Answer

Input Tax Credit (ITC) allows GST-registered businesses to claim credit for GST paid on purchases and reduce their final tax liability. For example, if you paid ₹1,800 GST on raw materials and collected ₹3,600 GST on sales, you pay only ₹1,800 net to the government.

Question 2

What items are blocked under Section 17(5) of CGST Act?

Accepted Answer

Section 17(5) blocks ITC on: motor vehicles and conveyances (except for specific business use), food and beverages, outdoor catering, club memberships, health and fitness centres, rent-a-cab, life and health insurance, and works contract services for construction of immovable property.

Question 3

What are the conditions to claim ITC under GST?

Accepted Answer

To claim ITC you must: possess a valid tax invoice or debit note, have received the goods or services, the invoice must appear in your GSTR-2B (supplier must have filed GSTR-1), you must have filed all your returns, and tax must have been paid to the government by the supplier.

Question 4

Can I claim ITC if my supplier has not filed GSTR-1?

Accepted Answer

No. From 2021, ITC claims are linked to GSTR-2B. If your supplier has not filed GSTR-1, the invoice will not appear in your GSTR-2B and ITC cannot be claimed. Always reconcile your purchase register with GSTR-2B before filing GSTR-3B.

Question 5

When must ITC be reversed?

Accepted Answer

ITC must be reversed if: you do not pay your supplier within 180 days (reverse ITC plus 18% interest), goods or services are used for personal purposes, goods are used for exempt or nil-rated supplies, or the supplier issues a credit note reducing the invoice value.

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ITC Eligibility Summary

⚠️ Blocked ITC Items (Section 17(5))

💡 About Input Tax Credit (ITC)