What is the GST Input Tax Credit?
Input Tax Credit is the mechanism that stops GST cascading. You collect GST on sales (output tax) and pay GST on purchases (input tax); you remit only the difference to the government.
Not all input tax is claimable. Blocked credits under Section 17(5) include motor vehicles, food and beverages, club memberships and personal-use goods.
Formula & worked example
Eligible ITC = Total input GST − blocked credits
Worked example: ₹10,00,000 of sales at 18% generates ₹1,80,000 of output GST. Purchases of ₹6,00,000 at 18% give ₹1,08,000 of input GST, less ₹5,000 blocked = ₹1,03,000 eligible. Net GST payable is ₹77,000 — an effective rate of 7.7% on sales rather than the full 18%.
How to use this gst input tax credit calculator
- Enter taxable sales excluding GST and the applicable rate.
- Enter taxable purchases excluding GST and their rate.
- Deduct any blocked credit under Section 17(5).
- If input exceeds output, the excess carries forward to the next period.
Smart tips
- ITC can only be claimed if your supplier has filed their GSTR-1 and the invoice appears in your GSTR-2B.
- Blocked credits include motor vehicles, food and beverages, club memberships and personal consumption.
- Claim ITC by 30 November following the financial year end, or the credit lapses permanently.
- Excess credit carries forward indefinitely and can be refunded in cases of exports or inverted duty structure.
- Reconcile GSTR-2B against your purchase register monthly — missing supplier filings are the top cause of lost credit.
Frequently asked questions
What is input tax credit?
The GST you paid on business purchases, which you can offset against GST collected on sales, so you only remit the difference.
What purchases are ineligible for ITC?
Section 17(5) blocks credit on motor vehicles, food and beverages, health services, club memberships, and goods for personal use.
What if my input credit exceeds output GST?
The excess carries forward to subsequent periods. Refunds are available for exports and inverted duty structures.
When can I claim ITC?
Only when the invoice appears in your GSTR-2B, meaning the supplier has filed. The deadline is 30 November following the financial year.
Want the theory behind the numbers? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: GST Council — 56th meeting: 5% merit rate, 18% standard rate, 40% special rate, in force 22 Sep 2025, GST Council — FAQs on the two-rate structure (Sep 2025). How we check these numbers.