Input Tax Credit (ITC) Rules Every Small Business Must Know
ITC is the heart of GST. Four conditions, blocked credits and the 180-day payment rule explained simply.
Four conditions under Section 16
You hold a valid tax invoice; you have received the goods or services; the supplier has reported it (appears in GSTR-2B) and paid tax; and you have filed your return.
Blocked credits under Section 17(5)
Motor vehicles for personal use, food and beverages, club memberships, works contracts for immovable property, goods for personal consumption, and free samples.
The 180-day rule
If you do not pay your supplier within 180 days of the invoice, reverse the ITC with interest; reclaim it when you pay.
Time limit
Claim ITC by 30 November following the financial year or the annual return date, whichever is earlier.
Keep the trail clean
Record every purchase bill in SmartGST and reconcile with GSTR-2B monthly so no eligible credit is missed.
Try it on your next invoice
SmartGST Invoices automates GST calculation, HSN codes, reminders and GSTR reports. Free to start.
Create a free accountKeywords: input tax credit rules · itc blocked credit. This article is general information, not professional tax advice.
