GST & Compliance
Input Tax Credit
ITC
GST paid on business inputs that can be set off against GST collected on outputs, reducing net tax payable.
What it means
Input Tax Credit is the mechanism that prevents tax cascading in GST. When you buy goods or services for business use, the GST you pay on those purchases (input tax) can be claimed as credit against the GST you collect on your sales (output tax). You pay only the difference to the government.
ITC is governed by Section 16 of the CGST Act. Eligibility requires that the supplier has filed GSTR-1 (so the invoice reflects in your GSTR-2B), you have a valid tax invoice, the goods/services are received, payment is made to the supplier within 180 days, and the use is for business purposes. Section 17(5) lists 'blocked credits' that cannot be claimed.
How Easedesk handles Input Tax Credit
Easedesk tracks ITC at the invoice level — capturing tax invoice, GSTR-2B status, 180-day payment window, and Section 17(5) classification. The ITC ledger shows eligible / ineligible / under-review buckets. ITC reversal entries for non-payment beyond 180 days are computed automatically.
Frequently asked questions
What is the 180-day rule for ITC?
Under Section 16(2) of CGST Act, ITC must be reversed (with 18% interest) if the supplier is not paid within 180 days of the invoice date. The reversed ITC can be re-claimed when payment is eventually made.
Related terms
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