Key takeaways
What this article covers, in order:
- What has to be true before I can claim a single rupee?
- Why does the portal care about GSTR-2B and not my purchase register?
- Which purchases never give credit?
- What if I sell both taxable and exempt things?
- Filling Table 4 without guessing
- How long do I have?
Picture a trader in Indore whose purchase register shows ₹4.2 lakh of GST for the quarter, while the portal only lets him claim ₹3.1 lakh. The short answer: input tax credit isn't what's in your books, it's what the law lets you prove. You need a valid tax invoice, the goods or services actually received, the invoice showing in your GSTR-2B, and a supplier who has paid the tax. Then you claim it in Table 4 of GSTR-3B, minus blocked credits and reversals, before the yearly deadline.
That gap of ₹1.1 lakh? Mostly suppliers who hadn't filed yet, one car purchase, and a stack of restaurant bills. Let's go through it in the order you'd check things each month.
What has to be true before I can claim a single rupee?
Section 16(2) sets the conditions. All of them, not some.
You must have a tax invoice or debit note from a registered supplier with your GSTIN on it. A cash memo or a bill of supply from a composition dealer won't work.
The invoice has to appear in your GSTR-2B. This is Section 16(2)(aa), and in practice it's the condition that bites hardest, because it depends on your supplier filing on time.
You must have actually received the goods or services. If goods arrive in lots against one invoice, credit comes when the last lot lands. Goods shipped straight to your customer on your instructions count as received by you.
The supplier must have paid the tax to the government. You can't see this directly, which is annoying, but if they don't pay, the department can come after your credit.
And you must have filed your GSTR-3B, since that's where the claim is made.
There's one more condition people forget until it hurts. You have to pay your supplier, value plus tax, within 180 days of the invoice date. If you don't, you reverse the credit and pay interest on it. Once you do pay, you can take it back.
Why does the portal care about GSTR-2B and not my purchase register?
Because Rule 36(4) restricts ITC to what's in GSTR-2B. Your purchase register still matters. It tells you what you should be seeing. But the portal only trusts what suppliers have reported.
GSTR-2B for monthly filers is generated around the 14th, and it's built from what you do in the Invoice Management System (IMS). Every invoice your suppliers report lands there, and you can accept it, reject it, or keep it pending for later. If you do nothing, it's treated as accepted.
Read that last line again. Deemed acceptance means a duplicate bill, or an invoice from someone who's misused your GSTIN, slides straight into your credit if you never open IMS. Ten minutes before the 14th each month is cheap insurance.
Reconcile, then claim
When you match your books to GSTR-2B, invoices usually fall into four piles. The ones in both you claim normally. The ones in GSTR-2B but not your books need a look: a missed bill, a supplier's typo, or something dodgier. The ones in your books but not GSTR-2B wait until the supplier files, so chase them. And the value mismatches need the supplier to amend through GSTR-1A or a later GSTR-1.
Which purchases never give credit?
Section 17(5) is the list of blocked credits. You can hold a perfect invoice and still get nothing. For a small business the usual suspects are:
- Cars and other passenger vehicles seating 13 or fewer (driver included), plus their repairs and insurance, unless you're in passenger transport, driving training or vehicle sales
- Food and drink, outdoor catering, beauty treatment, health services, unless it's your line of business or a legal obligation to staff
- Club and gym memberships
- Leave or home travel benefits for employees
- Building or civil work on your own premises (plant and machinery is treated differently)
- Anything for personal use
- Goods lost, stolen, destroyed, written off, or handed out as gifts and free samples
Kunal runs a design studio in Bengaluru. He bought an SUV for client visits, ₹14 lakh plus GST, and claimed the tax as ITC. Sounds reasonable. It isn't. That credit is blocked, and it came back with interest after a scrutiny notice. (Kunal is made up. The mistake is very real and very common.)
What if I sell both taxable and exempt things?
Then credit on shared costs like rent, electricity and software has to be split. A pharmacy selling exempt items next to taxable ones is the classic case. Rules 42 and 43 give the formula, and the reversal goes in Table 4(B) of GSTR-3B. Honestly, if this applies to you, have your CA set up the working once so you can just roll it forward each month.
Filling Table 4 without guessing
| Part of Table 4 | What goes in it |
|---|---|
| 4(A) | ITC available: imports of goods, imports of services, reverse charge purchases, ISD credit, and all other ITC |
| 4(B)(1) | Permanent reversals, e.g. Rules 38, 42, 43 and Section 17(5) |
| 4(B)(2) | Reversals you may reclaim later, like the 180-day non-payment |
| 4(C) | Net ITC, which is A minus B |
| 4(D) | Other details, such as credit reclaimed from earlier reversals, and ineligible ITC (for example, time-barred under Section 16(4)) |
4(A) comes pre-filled from GSTR-2B. Right now you can still edit it, but over-claiming beyond GSTR-2B is watched. Go past the threshold the system is set for and you'll get a DRC-01C intimation asking you to pay the difference or explain it. GSTN has talked about locking ITC values further, so check the portal's news section before you file rather than relying on what was true last quarter.
The portal also keeps an Electronic Credit Reversal and Re-claimed Statement. It tracks what you reversed under 4(B)(2) and what you took back. You can't reclaim more than you reversed, so keep your own numbers in step with it.
How long do I have?
Credit on an invoice from a financial year can be claimed until the earlier of 30 Nov of the following year (30 Nov 2026 for FY 2025-26 invoices) or the date you file that year's annual return.
So ITC on FY 2025-26 invoices has to be claimed in a GSTR-3B filed by 30 Nov 2026. Miss it and the credit is gone, even if the supplier finally files in Dec 2026. Which is why chasing late suppliers in Oct 2026 and Nov 2026 is worth the awkward phone calls.
Your monthly ITC routine
- [ ] Enter every purchase bill with supplier GSTIN, invoice number, date, taxable value and tax split
- [ ] Open IMS before the 14th and act on anything odd
- [ ] Download GSTR-2B and reconcile with your purchase register
- [ ] Follow up suppliers whose invoices are missing or wrong
- [ ] Take out blocked credits
- [ ] Check unpaid supplier bills older than 180 days and reverse where needed
- [ ] Apply common-credit reversals if you have exempt sales
- [ ] Fill Table 4 and cross-check it against GSTR-2B
- [ ] Keep invoices and delivery proof somewhere you can find them in three years
The mistakes that turn into notices
Claiming from the purchase register instead of GSTR-2B is number one, and it's the quickest way to a DRC-01C. Close behind is never opening IMS, so deemed acceptance pulls in invoices nobody checked.
Then there's buying from a supplier whose GSTIN is cancelled or fake. Verify new suppliers on the GST portal before the first order. It takes thirty seconds.
A quieter one: reverse charge. On RCM purchases you pay the tax in cash and then claim the same amount back as ITC in 4(A)(2) or 4(A)(3). Plenty of small businesses pay and forget to claim. That's money left on the table every month.
And watch for double claims, once in the original month and again after the supplier amends.
If you've got capital goods, exempt supplies or big reversals in the mix, get a CA to review your ITC position at least once a quarter.
How HelloBooks helps
When you enter a purchase bill in HelloBooks, the GSTIN, HSN/SAC and tax split are captured right there. The Free plan includes GSTR-2B reconciliation with ITC tracking, so you can see what matched, what's missing and what doesn't agree before you file. Then you file GSTR-3B directly to the GST portal from inside HelloBooks, with the portal's own interest and late fee shown first. Have a look at the GSTR-2B reconciliation page and the GSTR-3B filing page. Your CA can be invited to work in the same books.
FAQs
My supplier hasn't filed GSTR-1. Can I still claim?
Not this month. Once they report the invoice it shows up in a later GSTR-2B and you can claim then, as long as you're inside the Section 16(4) deadline.
What happens if I pay a supplier after 180 days?
You reverse the ITC with interest when the 180 days pass. When you finally pay, you reclaim it in a later GSTR-3B.
Can I claim GST on a laptop for the office?
Generally yes. It's a capital good used for business. It only becomes a problem if it's used personally or for exempt supplies.
What about the team lunch bills?
Usually blocked. Food and beverages fall under Section 17(5) unless providing them is a legal requirement for employees or you're in the food business yourself.
What's the last date for FY 2025-26 credit?
The earlier of 30 Nov 2026 or the date you file GSTR-9 for FY 2025-26.
Claim what you can prove, chase what's missing, and leave the car out of it.
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