ITC — Input Tax Credit
What it means
ITC is the credit a registered person under GST claims for the tax paid on inward supplies of goods and services used in the course or furtherance of business, offsetting it against output tax liability — the feature that makes GST a value-added tax.
Where you meet it in the CA course
Sections 16–21 of the CGST Act dominate GST questions at Intermediate and Final: eligibility conditions, blocked credits under section 17(5), apportionment and reversal rules.
Worked example
Output GST of ₹50,000 and eligible input GST of ₹32,000 means only ₹18,000 is payable in cash. If some inputs were used for exempt supplies, proportional credit is reversed under rules 42/43.
Related terms
Have questions?
Find answers.
Still unsure about something? We're happy to help you figure it out.
Talk to usWhat are the conditions to claim ITC?
Under section 16: possession of a tax invoice, receipt of goods/services, supplier has paid tax and reported the supply (reflected in GSTR-2B), and the recipient has filed returns. Payment to supplier within 180 days is also required.
What is blocked credit?
Section 17(5) lists supplies on which ITC is denied even for business use — e.g., motor vehicles (with exceptions), food and beverages, club memberships, works contracts for immovable property, and goods lost or given as free samples.