What ITC is with a worked example, the conditions to claim it, what's blocked, and how e-commerce sellers use it to cut their GST.
Input tax credit (ITC) lets a GST-registered business reduce the tax it pays on sales by the GST it already paid on its purchases — as long as the supplier has filed, the invoice is valid, and the goods or services are used for business.
You buy stock for ₹10,000 + ₹1,800 GST and sell it for ₹15,000 + ₹2,700 GST. You claim ₹1,800 as ITC and pay the government only ₹900 (₹2,700 − ₹1,800).
Sellers claim ITC on packaging, logistics, software, ads and stock — reducing the net GST payable each month. Reconcile your GSTR-2B before filing GSTR-3B so you only claim eligible credit.
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💬 Talk to our team View plans →Input tax credit (ITC) is the GST you paid on business purchases, which you subtract from the GST you collected on sales, so you only pay tax on your value addition.
A GST-registered business with a valid tax invoice, where the supplier has filed and the credit shows in GSTR-2B, the goods/services were received, and they are used for business.
Common blocked credits include motor vehicles (with exceptions), food and beverages, club memberships, and anything used for personal purposes or exempt supplies.
Your eligible credit is auto-drafted in GSTR-2B each month. Reconcile it before filing GSTR-3B and claim only what is eligible.
Yes. Sellers claim ITC on stock, packaging, logistics, software and advertising, reducing the net GST they pay each month.
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