Accountants often ask exactly what makes an invoice eligible for Input Tax Credit. Claiming ITC is not automatic just because you have a purchase bill. If you fail to meet the six primary conditions, the GST portal or an officer will reverse your credit, often with 18% interest.
Before looking at the exact rules, read our complete guide on Input Tax Credit meaning and conditions for a broader overview.
What is input tax credit?
Under Section 2(62) and 2(63) of the CGST Act, "input tax" is the central, state, integrated or union territory tax charged on any supply made to a registered person. It includes tax paid on reverse charge and imports. "Input tax credit" means taking the credit of this input tax. Section 16(1) states that every registered person is entitled to take credit of input tax on goods or services used in the course or furtherance of business. This amount goes directly into your electronic credit ledger.
The six mandatory conditions to claim ITC
Section 16(2) of the CGST Act lays down the exact rules for claiming input tax credit. You must meet all six conditions to be safe.
- Possession of invoice: You must have a tax invoice or debit note issued by a registered supplier (Section 16(2)(a)).
- Receipt of goods or services: You cannot claim ITC on advance payments. You must actually receive the goods or services (Section 16(2)(b)). If goods arrive in lots, you can take credit only upon receiving the last lot.
- Appearance in GSTR-2B: The supplier must file their GSTR-1, and the invoice details must be communicated to you in GSTR-2B (Section 16(2)(aa)).
- Taxes paid to government: The supplier must actually pay the tax charged on your invoice to the government (Section 16(2)(c)).
- Filing of return: You must file your GSTR-3B return under section 39 (Section 16(2)(d)).
- ITC not restricted: The credit must not be restricted under section 38. With the new Invoice Management System (IMS), you must Accept or keep the invoice Pending, but a Rejected invoice blocks the ITC (Section 16(2)(ba)).
Common mistake: Claiming ITC on an invoice just because you paid the vendor. Since 1 January 2022, there is no provisional credit. If the invoice is missing from your GSTR-2B, you cannot claim the ITC.
The 180 days payment rule
If you receive goods and an invoice, but fail to pay the supplier within 180 days from the invoice date, you must reverse the ITC. You have to pay an amount equal to the ITC availed, along with 18% interest, while filing your GSTR-3B. Once you make the payment to the vendor later, you can reclaim this ITC.
Goods received in lots
When goods against a single invoice are received in multiple lots or instalments, you are entitled to take the input tax credit only upon receipt of the last lot.
Time limit to claim ITC
You cannot claim ITC indefinitely. Under Section 16(4) of the CGST Act, the deadline to claim ITC for any financial year is the 30th of November following the end of that financial year, or the date of furnishing the annual return, whichever is earlier.
For example, for an invoice dated 15 August 2025, you must claim the ITC before 30 November 2026. Any ITC claimed after this date is invalid and will attract notices.
Steps to verify ITC eligibility
- Verify GSTR-2B: Log into the GST portal. Go to Services, then Returns, then Returns Dashboard. Download your GSTR-2B for the month.
- Check receipt: Confirm with your warehouse or team that the goods or services were actually received.
- Check payment status: Ensure no unpaid invoices have crossed the 180 days mark.
- Reconcile: Match the GSTR-2B data against your purchase register to ensure you only claim what is valid.
Worked example
A business receives three invoices in October 2026. Here is how the rules apply.
| Invoice | Amount | Status | Result |
|---|---|---|---|
| INV-101 | ₹25,000 | Goods received, in GSTR-2B | Eligible for ITC |
| INV-102 | ₹12,000 | Goods received, not in GSTR-2B | ITC Blocked |
| INV-103 | ₹50,000 | In GSTR-2B, goods not received yet | ITC Delayed |
For INV-102, the buyer must follow up with the supplier to file their GSTR-1. For INV-103, the ITC can be claimed in the next month once the goods arrive.
Frequently asked questions
What is the time limit to claim input tax credit?
The time limit to claim input tax credit for a financial year is the 30th of November of the following year, or the date you file your annual return, whichever is earlier.
What happens if I do not pay the supplier within 180 days?
If you do not pay your supplier within 180 days from the invoice date, you must pay an amount equal to the ITC claimed along with interest. You can reclaim this ITC once you make the payment.
Check your own GSTR-2B
Our tool matches your purchase register against your GSTR-2B in seconds to find missing invoices and mismatches. Your GSTR-2B and purchase register files are read in your browser and never uploaded to any server.
For more details on claim procedures, read our guide on ITC claim rules under GST or head back to our main guide on understanding ITC and GSTR-2B.
Last checked: 10 October 2026. Sources: CGST Act Section 16.