In India, a GST-registered business can generally claim input tax credit (ITC) on goods and services used or intended for use in its business—but only after meeting the statutory conditions, allocating shared costs correctly and excluding blocked credits. A business expense or a tax invoice alone does not make the GST credit claimable.
This guide explains the general position under the Central Goods and Services Tax (CGST) framework, current as of 7 October 2026. State and Union Territory laws, Integrated GST provisions, notifications, later amendments and the facts of a particular transaction can affect the result.
Who can claim GST input tax credit?
The claimant must be a registered person, and the goods or services must be used or intended to be used in the course or furtherance of business. Section 16 of the CGST Act sets out the general entitlement and its conditions; section 17 limits credit in circumstances including non-business use, exempt supplies and specified blocked categories.
Apply the tests in sequence: confirm the claimant and business purpose, check the supporting document and receipt, meet the tax and return conditions, apportion shared use, and screen for blocked credit. A claim that passes one test can still fail another.
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What conditions must be met before claiming credit?
Section 16 requires an eligible document and satisfaction of other statutory conditions. Check each item against the transaction and the relevant return period.
- Eligible document: Hold a tax invoice, debit note or other prescribed tax-paying document.
- Receipt: The goods or services must have been received. If goods covered by one invoice arrive in lots or instalments, credit is available when the last lot or instalment is received.
- Tax and return conditions: The tax charged on the supply must be paid to the government within the statutory framework, and the recipient must furnish the relevant return.
- Supplier payment within 180 days: If the recipient does not pay the supplier the value of the supply plus tax within 180 days from the invoice date, the credit generally has to be added back with applicable interest in the prescribed manner. The recipient may re-avail the credit after paying the supplier.
The supplier-payment rule is distinct from the statutory condition concerning payment of tax to the government; satisfying one does not establish the other.
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Which expenses and purchases are commonly blocked?
Section 17(5) lists categories for which ITC is generally unavailable, subject to exceptions written into the Act. The category label alone is not enough: check the precise provision and the use or onward supply involved.
| Purchase or use | General treatment | Key qualification |
|---|---|---|
| Specified motor vehicles and conveyances | Credit is generally blocked for the vehicles covered by the relevant provision. | Exceptions include vehicles used for further supply of such vehicles, passenger transportation, or imparting driving, flying or navigating training. The Act also provides a goods-transport exception for vehicles or conveyances within the relevant clause. |
| Food and beverages, outdoor catering, beauty treatment, health services, cosmetic or plastic surgery | Generally blocked under section 17(5). | The section contains exceptions, including specified onward taxable supplies, supplies of the same category, composite or mixed supplies, and other stated activities. Confirm which exception, if any, applies to the transaction. |
| Club, health or fitness-centre membership | Generally blocked. | Apply the wording and exceptions in section 17(5) to the specific supply. |
| Rent-a-cab, life-insurance and health-insurance services | Certain supplies are generally blocked. | Exceptions depend on the statutory category and circumstances, including specified onward supplies or legal obligations to provide the service. |
| Personal consumption | Credit on goods or services used for personal consumption is blocked. | Where a purchase is mixed-use, the business share is subject to apportionment; personal use is not converted into business use by an invoice. |
| Lost, stolen, destroyed, written-off, gifted or free-sample goods | Credit is blocked for goods in the listed circumstances. | Check the exact statutory language and facts, particularly where goods were disposed of or their status is disputed. |
| Purchases on which tax is paid under the composition scheme | Credit is blocked. | Check the supplier’s tax treatment and the governing provision. |
| Specified purchases by a non-resident taxable person | Credit is generally blocked. | The provision includes an exception for goods imported by that person. |
Can a business claim GST on a car?
Not merely because the car is used for business. For passenger vehicles covered by the blocked-credit provision, credit is generally unavailable unless the use falls within a statutory exception—for example, the business supplies such vehicles onward, transports passengers, or provides driving training. CBIC’s FAQ also uses cars as an example of the general restriction. Identify the applicable vehicle category and exception rather than relying on a broad claim that a vehicle is a business asset.
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What should an invoice review flag?
Under the CBIC invoice rules, invoices or debit notes issued in pursuance of tax payable under sections 74, 129 or 130 must prominently state “INPUT TAX CREDIT NOT ADMISSIBLE.” Treat that wording as a document-screening signal and check the applicable provision and transaction facts before deciding the claim.
How should businesses treat mixed use and exempt supplies?
Credit must be apportioned where a purchase serves both eligible and ineligible purposes. Section 17(1) limits credit to the business-use share where an input is also used for a non-business purpose. Section 17(2) limits common inputs and input services used for taxable and exempt supplies to the portion attributable to taxable supplies, including zero-rated supplies. Any section 17(5) blocked credit must also be excluded.
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The CGST Rules prescribe calculation and reversal procedures for common input and input-service credits, including a year-end calculation for specified amounts. Shared capital goods have a distinct allocation mechanism, including a five-year useful-life assumption for the relevant shared capital goods. Use the prescribed method for the actual supply mix; there is no universal percentage that can be applied to every business.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What is the deadline for claiming ITC?
Under the general rule in section 16(4), credit for an invoice or debit note cannot be taken after 30 November following the end of the financial year to which it relates, or after furnishing the relevant annual return, whichever happens first. CBIC Circular 237/31/2024-GST reproduces the statutory wording as “after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.”
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Do the 2024 retrospective provisions change the deadline?
The Finance (No. 2) Act, 2024 inserted sections 16(5) and 16(6) retrospectively from 1 July 2017 for specified cases. In Circular 237/31/2024-GST, dated 15 October 2024, CBIC explains how the provisions apply to certain ongoing investigations and proceedings, pending adjudication or appeal, and specified orders where an appeal had not been filed. The circular also says that a refund is not available merely because tax was paid or credit reversed when the retrospectively available credit now falls within those subsections. This is not a blanket extension for every late claim; whether it applies depends on the specified period and procedural history.
What happens if the business claimed depreciation on the GST component?
Section 16(3) prevents a business from taking ITC on the tax component of capital goods or plant and machinery if it has claimed depreciation on that same tax component under income-tax law. This is a no-double-benefit rule: do not claim both the GST credit and depreciation on the same tax amount.
How to review a proposed ITC claim
- Confirm the claimant and purpose. Check that the claimant is registered and the purchase is used or intended for business.
- Verify the document and receipt. Match the eligible invoice, debit note or prescribed document to the goods or services received, including delivery of the final lot where applicable.
- Check the statutory conditions. Confirm the tax and return conditions, and monitor whether the supplier has been paid the value plus tax within 180 days.
- Allocate shared use. Separate business from non-business use and taxable, including zero-rated, from exempt supplies using the prescribed rules.
- Screen for blocked credit. Review section 17(5), its exceptions and any invoice notice that ITC is not admissible.
- Check the claim deadline. Apply section 16(4) or assess whether a specified retrospective provision applies to the particular case.
- Check capital-asset treatment. Ensure depreciation has not been claimed on the same tax component for which credit is sought.
The relevant primary references are sections 16 and 17 of the CGST Act, the CGST Rules on apportionment and reversal, CBIC Circular 237/31/2024-GST, and the CBIC FAQ and invoice-rules material. Eligibility is transaction-specific; where amounts, returns or dispute history are material, have the records reviewed against the applicable enactments and notifications.
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