— Expert Advisory by Hemant Consulting
At Hemant Consulting, we specialize in providing compliance-driven GST solutions tailored for businesses, startups, consultants, and service providers. One of the most common and crucial areas where businesses face confusion is Input Tax Credit (ITC) under the GST regime. Here’s a clear, practical explanation to help you claim ITC correctly and avoid unwanted notices or disallowances.
✅ What is Input Tax Credit (ITC)?
Input Tax Credit (ITC) allows businesses to reduce the tax they pay on output (sales) by claiming a credit for the tax they have already paid on inputs (purchases and expenses).
In simple terms:
GST paid on purchases = Credit you can use to pay your GST liability.
📜 Legal Basis: Section 16 of the CGST Act, 2017
✅ Who Can Claim ITC?
You can claim ITC if:
You are a registered taxpayer under GST.
You use the goods/services for business purposes.
You have valid tax invoices from a registered supplier.
📌 Conditions to Claim ITC (As per Law):
To legally avail ITC, the following conditions must all be satisfied:
Condition | Requirement |
|---|---|
📄 Invoice | You must have a proper tax invoice or debit note. |
🚚 Receipt of Goods/Services | You must have actually received the goods/services. |
💸 Tax Paid to Government | Supplier must have paid the GST collected to the government. |
📝 GSTR Filing | You must file monthly GST return (GSTR-3B). |
⏳ Time Limit | ITC must be claimed by 30th Nov of next FY or before filing the Annual Return—whichever is earlier. |
🚫 When ITC is NOT Allowed?
Here are some key ineligible ITC items:
Item | ITC Status |
|---|---|
Motor vehicles for personal use | ❌ Not Allowed |
Food, beverages, club & gym memberships | ❌ Not Allowed |
Works contract for construction of immovable property | ❌ Not Allowed |
Personal use goods/services | ❌ Not Allowed |
Goods lost, stolen, written off | ❌ Not Allowed |
🧾 Real-World Examples (By Hemant Consulting)
Transaction | ITC Status |
|---|---|
Office furniture purchase with GST invoice | ✅ Allowed |
Hotel stay during official client visit | ✅ Allowed (if for business use) |
Restaurant bill for birthday party | ❌ Not Allowed |
Company car bought for director’s use | ❌ Not Allowed |
💼 Hemant Consulting’s Specialization in ITC
At Hemant Consulting, we assist businesses in:
✅ Identifying eligible and ineligible ITC to maximize claims
✅ Verifying supplier compliance to avoid ITC mismatch
✅ Monthly GSTR-2B reconciliation
✅ Resolving ITC-related notices from the department
✅ Advising on ITC structuring for new business models
🛡️ Our goal is to help you protect your working capital while staying 100% GST compliant.