Key Takeaways All eligible ITC must be claimed before November 30 of the following financial year, missing this deadline makes the credit permanently ineligible. Most ITC losses occur due to supplier non-compliance, especially when invoices don’t appear in GSTR-2B. Monthly automated reconciliation significantly improves ITC accuracy and prevents audit notices. Optimized ITC management directly improves cash flow by reducing out-of-pocket GST payments. If you’ve ever spent a Friday evening digging through email threads labelled “invoice_final_FINAL.pdf,” you already know the strain Input Tax Credit (ITC) can cause. One mismatched GSTIN, one vendor who “forgot” to file GSTR-1, and suddenly your clean GST return looks indecipherable.
A recent CAG audit found deviations in about 15% of high-risk GST cases , with ineligible or irregular ITC being one of the biggest culprits. Pair that with the ₹1.79 lakh crore worth of ITC-linked fraud detected between FY21 and FY25, and it’s clear why ITC makes finance teams nervous.
Effective ITC management and early GST reconciliation can significantly improve cash flow, prevent blocked credits, and greatly reduce the risk of audit issues.
In this guide, we’ll break down ITC basics, common pitfalls, and practical ways to optimise your claims without losing sleep.
What is GST Input Tax Credit (ITC)? GST Input Tax Credit (ITC) is the system that lets businesses reduce the tax they owe by claiming credit for the GST they’ve already paid on purchases.
In simpler terms: if you’ve paid tax while buying goods or services for your business, you can subtract that from the tax you need to pay on your sales. It’s the government’s way of saying, “We won’t tax the same value multiple times.”
ITC exists to eliminate cascading tax , the pre-GST problem where every stage of the supply chain got taxed on top of previous taxes. It helps prevent “tax-on-tax” domino effect that makes costs balloon as goods move from manufacturer → distributor → retailer → customer. With ITC, each stage only pays tax on the value added , not on the entire previous cost stack.
Here’s a quick example:
You buy raw materials worth ₹10,000 and pay ₹1,800 GST at 18%. You sell the finished product for ₹20,000, charging ₹3,600 GST at 18%. Without ITC, you’d pay the full ₹3,600 to the government. With ITC, you subtract the ₹1,800 you already paid, and owe only ₹1,800. That’s a 50% reduction in GST payable, all because ITC adjusts for taxes already paid.
For businesses, this isn’t just a compliance nicety; it directly improves cash flow, reduces unnecessary out-of-pocket tax, and keeps working capital where it belongs: in operations, not locked up in tax reclaims.
Eligibility Criteria to Claim GST ITC in India (2026) To claim ITC, your business must satisfy all six conditions at the same time. If even one requirement is not met, the entire ITC claim becomes invalid. This makes eligibility checks a critical step before claiming ITC.
1. Valid Tax Invoice or Prescribed Document: You need a proper tax invoice, debit note, or bill of entry issued by a registered supplier. A “valid” invoice isn’t just a PDF with a logo. It must include GSTIN, invoice number, date, taxable value, tax breakup (CGST/SGST/IGST), HSN/SAC, and place of supply.Valid example: All required fields present; Can be used for ITC Invalid example: File name: “invoice_142_final.pdf”Cannot be used for ITC
2. Goods or Services Must Be Actually Received: ITC can be claimed only after the goods or services have been received:
1. For goods delivered in multiple lots, ITC becomes eligible after the final lot arrives. For example: A three-part machinery shipment → ITC allowed only after the last part is delivered
2. For services, “received” means the service was actually performed and not when the PO was created or an advance was paid.For example: Monthly consulting services → ITC applies month by month as services are completed.
3. Supplier Has Filed GSTR-1 and Invoice Appears in Your GSTR-2B : Your ITC depends heavily on supplier compliance. If the supplier doesn’t file GSTR-1, your invoice won’t appear in GSTR-2B , and you cannot claim ITC. This is why invoice-matching workflows (IMS) and vendor follow-ups exist.
4. Tax Has Been Paid to the Government by the Supplier: Even if the supplier issues an invoice and files GSTR-1, ITC is still invalid if they fail to deposit the GST they collected. For example: Vendor collects ₹18,000 GST → doesn’t deposit it → your ITC remains blocked until they pay.
5. You Have Filed GSTR-3B: ITC becomes claimable only in the period in which you file your GSTR-3B . If 3B is not filed, the credit simply isn’t recognised.
6. Supplier Payment Must Be Made Within 180 Days: You must pay the supplier (including GST) within 180 days of the invoice date. If not, you must reverse the ITC, and pay interest from the date you initially claimed the credit.For example:
For FY 2024–25 onwards, all ITC claims, corrections, and missed credits must be completed by November 30 of the following financial year.
This deadline replaces the earlier practice of claiming missed ITC during annual return filing.
What Are Blocked ITC Credits Under Section 17(5)? Not all GST-bearing expenses qualify for ITC. Section 17(5) of the CGST Act specifically blocks ITC on certain categories, even if the expense is genuinely for business use. These exclusions exist because the law treats these expenses as “personal in nature,” “prone to misuse,” or simply “not directly linked to value creation.”
Here are the major categories of blocked ITC, along with important exceptions you should know:
1. Motor Vehicles and Conveyances As a rule, ITC on motor vehicles with seating capacity under 13 (including the driver) is blocked. This includes cars, SUVs, sedans, etc.
Why are these blocked? The law assumes these vehicles are prone to mixed or personal use.
Exceptions where ITC is allowed :
Vehicles used for transportation of goods (e.g., delivery vans, trucks, 2-wheelers used for courier services). Vehicles used for passenger transport (e.g., taxi operators). Vehicles used for training (e.g., driving schools). Vehicles held as stock-in-trade (e.g., automobile dealers). Examples:
Blocked: Company director’s car, admin team’s scooter, office cab for employee pickup.Allowed: A logistics company buying a delivery van; an auto dealership purchasing cars for inventory; a courier company using bikes for deliveries.2. Food, Beverages, and Related Services Food, beverages, outdoor catering, employee meals, beauty treatments, health services, and salon services generally fall under blocked ITC, even if used during business hours.
Why are these blocked? These expenses are seen as personal consumption unless directly tied to outward supply.
Exceptions where ITC is allowed:
When food/catering is supplied to customers (e.g., restaurant serves meals). When bundled as part of a composite or mixed supply (e.g., hotel banquet package). When providing meals is a legal obligation (e.g., factories mandated to provide canteen services under labour law). Examples:
Blocked: Office pantry snacks, employee lunches, HR wellness sessions.Allowed: A restaurant purchasing food ingredients; a hotel serving buffet meals to corporate clients.3. Membership Fees and Personal Benefits Club memberships, gym subscriptions, and recreational facility fees are blocked because they fall under “personal benefits.”
Employee travel perks such as vacation allowances, LTC, or holiday reimbursements also trigger blocked ITC even if booked through the company.
Business logic: The law distinguishes between professional expenditure and personal enjoyment, even when paid by the employer.
Examples:
Blocked: Gym memberships for employees, golf club subscriptions for networking, employee vacation packages.Allowed: Membership fees paid to professional bodies (e.g., ICAI, CII) that directly relate to business.4. Insurance Premiums Health insurance and life insurance for employees generally fall under blocked ITC, unless mandated by law.
Exceptions:
If a statute requires the company to provide insurance (e.g., workmen’s compensation, employee safety insurance). Insurance for business assets, such as property, plant, machinery, or liability insurance, is fully eligible since it protects business operations. Examples:
Blocked: Optional employee health insurance, director’s life insurance, group mediclaim not mandated by law.Allowed: Factory fire insurance, machinery breakdown insurance, professional liability insurance.5. Real Estate and Construction ITC is blocked on works contract services and construction of immovable property — whether constructed internally or through contractors.
Exceptions:
When the construction is for plant and machinery , ITC is allowed. Repairs, maintenance, and renovations that do not result in a new immovable structure may be eligible. Examples:
Blocked: Building a new office, civil construction for a warehouse, contractor payments for interior construction.Allowed: Installing heavy machinery foundations, repairing an existing office, electrical rewiring.6. Other Blocked Credits Section 17(5) also blocks several miscellaneous ITC categories:
Lost, stolen, destroyed, or written-off goods → ITC must be reversed (e.g., damaged stock, pilferage, fire-destroyed inventory).Free samples or gifts → Since they have no outward taxable supply, ITC is blocked (e.g., free Diwali gift hampers).Personal use goods/services → Any mixed-use item must be proportionately reversed (e.g., laptops used 50% for home use).Purchases from composition dealers → ITC is not allowed because composition dealers do not charge GST.Example summary: If goods don’t contribute to a taxable outward supply or are not consumed in business, ITC won’t apply.
ITC Claim Process: How to Claim GST Input Tax Credit Step-by-Step Claiming ITC involves a coordinated workflow that connects your suppliers, the GST portal, your internal purchase records, and your monthly return filings. Each stage depends on the accuracy of the previous one, and a mistake anywhere can lead to reversals, interest liabilities, or blocked credits. Understanding how the end-to-end process works helps finance teams avoid unnecessary cash flow shocks and audit complications.
Here’s the complete ITC claim process in 2026, including the new Invoice Management System (IMS) requirement:
1. Supplier Files GSTR-1 with Your Purchase Details: The process starts with your supplier, who must file GSTR-1 by the 11th of the following month. This return contains all outward supplies made to you.
2. Supplier Files GSTR-1 with Your Purchase Details: Once your supplier files GSTR-1, invoices show up in the Invoice Management System (IMS) on the GST portal. This is a manual step, meaning you must log in to the GST portal and take action on each invoice. You can choose to Accept (Invoice will move to GSTR-2B for ITC ), Reject (You disagree with the invoice and the supplier is notified ), or mark an invoice as Pending (You need more time; the invoice won’t move to GSTR-2B this month ).
3. Accepted Invoices Flow to Your GSTR-2B: Once invoices are accepted in IMS, they populate GSTR-2B, the monthly ITC statement generated on the 14th of every month. GSTR-2B reflects strong supplier compliance and a well-managed IMS workflow.
4. Reconcile GSTR-2B with Your Purchase Register (Critical Step): This is one of the most critical stages. Your finance team must reconcile the invoices appearing in GSTR-2B with the invoices recorded in your purchase register.GST reconciliation tools significantly reduce errors by matching invoice data based on GSTIN, invoice number, values, dates, and IRN records.
5. Report ITC in GSTR-3B Table 4: Once you finish reconciling, everything comes down to GSTR-3B Table 4; this is where your ITC either shines or collapses dramatically. It is a three-part test your credits must pass.
Table 4(A) is your gross ITC, basically all the credits you could claim is life were perfect. It includes IGST on imports, ITC on imported services, reverse-charge credits you’ve paid and want back, ISD credits, and all regular domestic ITC flowing in from your accepted IMS invoices.
6. Maintain Documentation for Audit: Once ITC is claimed, strong documentation is critical for audit defense. You must maintain tax invoices, debit notes, proof of receipt of goods/services, payment proofs (especially for 180-day compliance), IMS action logs, GSTR-2B statements, reconciliation reports, and filed GSTR-3B returns.
The ITC process combines two layers: manual actions (IMS acceptance) and automated or semi-automated actions (invoice reconciliation). Finance teams that streamline both layers reduce mismatches, avoid reversals, and file cleaner GSTR-3B returns.
Automated reconciliation tools, in particular, save substantial time and eliminate the tedious manual matching that often leads to human error.
Understanding ITC Reversal Rules ITC reversal is the process of giving back previously claimed credit to the government. It feels painful, but it’s required in situations where your original ITC eligibility changes after you’ve claimed it, typically due to delayed payments, credit notes, or mixed-use inputs. Reversal ensures the ITC you keep is only what you’re truly entitled to.
The GST law mandates ITC reversal in these scenarios:
1. Non-Payment to Supplier Within 180 Days If you don’t pay your supplier within 180 days from the invoice date (including the GST portion), you must reverse the ITC originally claimed. This reversal must also include interest at 18% per annum, calculated from the date you first claimed ITC until the date of reversal. The good news? Once you finally pay the supplier, you’re allowed to reclaim the ITC—no additional interest required at that stage.
Example:
Invoice Date: 1 Jan
Invoice Value: ₹1,00,000 + ₹18,000 GST
Payment made on: 15 Aug (after 180 days)
→ ITC of ₹18,000 must be reversed in July GSTR-3B with interest.
→ ITC can be reclaimed in the month of payment (August).
In GSTR-3B, this goes into Table 4(B)(1) as a payment-delay reversal.
2. Credit Note Received from Supplier Suppliers issue credit notes for returns, post-sale discounts, rate corrections, or invoice errors. When you receive a credit note, your eligible ITC must reduce proportionately, because your taxable value has reduced.
Budget 2025 clarified this through an amendment to Section 34, making it explicit that the ITC reversal must mirror the credit note value.
Example:
Original Invoice: ₹50,000 + ₹9,000 GST
Credit Note: ₹10,000 + ₹1,800 GST
→ You must reverse ₹1,800 ITC in the month the credit note appears in GSTR-2B
This ensures ITC always aligns with the revised taxable value.
3. Proportionate Reversal for Mixed Use When inputs are used for both taxable and exempt supplies, or partly for business and personal use, you cannot claim full ITC. GST rules require proportionate reversal under Rule 42 (goods/services) and Rule 43 (capital goods).
The reversal formula calculates how much of the credit relates to exempt or personal use.
Example:
Total ITC for the month: ₹1,00,000
Taxable turnover: ₹40,00,000
Exempt turnover: ₹10,00,000
Reversal = ITC × (Exempt Turnover ÷ Total Turnover)
= ₹1,00,000 × (10,00,000 ÷ 50,00,000)
= ₹20,000 reversal
These reversals must be done monthly, but there is also an annual reconciliation at year-end to correct over- or under-reversal amounts.
All such reversals are reported in GSTR-3B Table 4(B)(1).
Sector-Specific ITC Compliance Challenges ITC compliance doesn’t look the same for every business. Different industries have unique supply chains, pricing models, exemptions, and vendor relationships , all of which shape how ITC should be claimed (and what can go wrong).
Each industry faces unique ITC challenges. Here's what your finance team should prioritise:
1. ITC in Manufacturing Businesses Manufacturing has the most layered ITC structure because of capital goods, raw materials, and multi-stage production.
Key ITC areas:
Capital goods: Machinery, production equipment, conveyor systems, all eligible if invoices and supplier filings are correct.Raw materials & consumables: Regular ITC, but dependent on high vendor compliance.Job work: ITC allowed, but goods must return within statutory timelines or ITC may require reversal.Where manufacturing companies slip:
Incorrect input–output ratios Untracked scrap/waste adjustments Suppliers filing in wrong GST periods Exempt goods sold → triggers proportionate reversals (Rule 42) What to prioritise: Strong vendor follow-ups, capital goods tracking, and reconciling job-work movements.
2. ITC for SaaS & Digital Service Providers Digital businesses deal heavily with cloud platforms, global SaaS tools, and cross-border suppliers.
Common ITC sources:
Cloud hosting (AWS, GCP, Azure) SaaS subscriptions (HubSpot, Slack, Canva) Digital marketing expenses Software licences Key compliance challenges:
Imported services → IGST under RCM, then ITC claimablePlace of supply mistakes → often due to foreign vendors not understanding Indian GSTEmployee perks → food, wellness, outings = blocked under Section 17(5)Export of services → zero-rated, but documentation must match (LUT, BRC/FIRC)What to prioritise: Correct RCM reporting, POS validation, and separating employee-benefit expenses from claimable ITC.
3. ITC for Exporters & Zero-Rated Supplies Exporters often accumulate large ITC balances since outward supplies are zero-rated.
Two options for accumulated ITC:
Claim refund of unutilised ITCCarry forward to future periodsKey requirements:
Valid LUT to export without IGST Perfect matching between GSTR-1, GSTR-3B, and shipping bills Strict refund documentation (invoices, ledgers, RFD forms) Common pain points:
Inverted duty structure leads to persistent credit accumulationRefund delays due to mismatched export documentation Missing BRC/FIRC for service exporters What to prioritise: Refund-readiness, export–return reconciliation, and clean turnover reporting.
4. ITC in Real Estate & Construction This sector experiences the strictest ITC restrictions under Section 17(5).
Blocked Credits:
Construction of immovable property (commercial/residential) Works contract services used for building structures Interior build-outs and structural renovations Allowed Credits: Plant & machinery, including elevators, HVAC systems, generators, and production equipment.
Common Confusions
Scenario
ITC Eligibility
New building construction
❌ Blocked
Structural renovation
❌ Blocked
Repair & maintenance (non-structural)
✔️ Allowed
Installation of plant & machinery
✔️ Allowed
ITC on under-construction property sold to buyers is largely blocked under the real estate GST scheme.
Transition: Real estate companies must distinguish carefully between blocked construction costs and eligible plant & machinery ITC.
Common Reasons for ITC Rejection & How to Avoid Them Despite being eligible, many businesses lose ITC claims due to avoidable errors. Based on GST audit patterns, these are the top ITC rejection scenarios and how to prevent them.
Here are the seven most common ITC rejection reasons and prevention strategies:
1. Invoice in Your Books But Not in GSTR-2B: Happens when the supplier doesn’t file GSTR-1, files in the wrong period, or enters your GSTIN incorrectly. Result: Invoice never appears in your GSTR-2B → ITC becomes ineligible. How can it be prevented:
Track vendor compliance monthly (filed vs not filed). Verify GSTIN at the time of onboarding. Monitor GSTR-2B every month before claiming ITC. Follow up with suppliers for missing invoices and corrections. 2. Supplier Filed GSTR-1 but Didn’t Pay the Tax: GSTR-1 filing alone doesn’t validate ITC — supplier must deposit GST. It is hard to detect because there’s no direct visibility into supplier payments. How can this be prevented:
Maintain high-compliance vendor lists. Periodically review vendors with repeat mismatches or withholding risks. Encourage timely filing through contract terms and payment holds. 3. ITC Claimed After the November 30 Deadline: Missing the statutory deadline makes ITC permanently ineligible. Common causes are delayed bookkeeping, late vendor invoices, missed reconciliations. This can be prevented by:
Implement real-time invoice capture. Establish monthly closing rituals (not year-end panic). Set automated reminders for October–November reconciliation cycles. 4. Invoice Details Mismatch (GSTIN, Amount, Invoice Number): Even small typing errors break auto-matching: “ABCD1234” vs “ABCD1235”. It impacts GSTR-2B matching, leading to partial or full rejections. This can be prevented by:
Use automated data capture (OCR , API ingestion) Validate GSTIN and invoice format at data-entry stage. Run invoice-level reconciliation before GSTR-3B filing. 5. ITC Claimed on Blocked Credit Category: Frequent mistakes: food & beverages, staff welfare, personal vehicle fuel, club memberships. It is blocked under Section 17(5) regardless of business justification. Prevention can be done if you:
Maintain a blocked credit checklist. Set expense category mapping in accounting software. Use approval workflows to stop blocked-expenses ITC before filing. 6. Payment to Supplier Not Made Within 180 Days: ITC must be reversed if payment isn’t made within 180 days (plus interest). Many teams forget to reverse, leading to audit notices. This can be prevented if you:
Track invoice-wise aging. Connect payment cycles with ITC eligibility checks. Automate alerts for invoices nearing 180 days. 7. ITC Not Reversed When Required: Missed reversals attract interest and audit flags. It can happen due to supplier credit notes, expired 180-day payment window, wrong ITC claimed earlier, and mixed-use ITC (rule 42/43). This can be prevented by:
Use automated reversal triggers based on credit notes and payment aging. Perform a monthly internal ITC audit to catch missed reversals early. GST ITC Reconciliation: Why It Matters in 2026 ITC reconciliation means matching your purchase register with GSTR-2B to ensure that every credit you claim is actually eligible and visible to the government.
With the new Invoice Management System (IMS) adding a manual “accept/reject” step before invoices reach GSTR-2B, reconciliation is now more important and more time-sensitive than ever.
Good reconciliation protects cash flow , prevents incorrect ITC, and reduces the chances of receiving GST notices.
The Two-Way Reconciliation Requirement Reconciliation connects what you recorded internally with what the government acknowledges. Both sides must match for ITC to be claimable.
Two data sources must now match perfectly:
Purchase Register → Your internal truth (what you booked)GSTR-2B → Government’s truth (what the portal recognizes)If they don’t match, your ITC claim is considered incorrect, even if the purchase is genuine.
The modern reconciliation workflow looks like this:
Step
What Happens
Notes
1
Supplier files GSTR-1
By 11th of the following month
2
Invoice appears in IMS
Manual action required
3
You accept / reject / keep pending
Determines what flows into GSTR-2B
4
Accepted invoices flow into GSTR-2B
Generated on the 14th of every month
5
Reconcile GSTR-2B ↔ Purchase Register
Manual or automated process
6
File GSTR-3B
Use clean, reconciled ITC data
A crucial point: IMS is manual, but reconciliation afterward can (and should) be automated using software. This prevents human errors and saves hours of manual matching.
Risks of Poor ITC Reconciliation Poor reconciliation can hurt both GST compliance and cash flow. Errors that once went unnoticed are now detected automatically due to real-time matching systems used by the GST department.
Key risks include:
Over-claimed ITC → Leads to demand notices, 18% interest, and penaltiesUnder-claimed ITC → Immediate working capital lossGSTR -3B vs GSTR-2B reconciliation mismatches → Automatically triggers DRC-01C Vendor non-compliance → Causes invisible ITC lossUnreported reversals → Audit risks, backdated interest, compliance flagsReal audit scenarios often involve invoices missing from GSTR-2B, wrong ITC claimed on blocked credits, delayed 180-day vendor payments , or unadjusted credit notes.
With AI-powered matching now active, discrepancies appear faster than ever, sometimes within hours of filing.
How IMS in 2025 Makes Reconciliation More Complex (But Also More Transparent) IMS changes the classic ITC flow. Until 2024, invoices automatically moved from the supplier’s GSTR-1 to your GSTR-2B.
Old Workflow: Supplier files GSTR-1 → Invoice goes straight to GSTR-2B
New 2025 Workflow (with IMS):
Supplier files GSTR-1 Invoice appears in IMS You manually choose: Accept → Goes to GSTR-2BReject → Removed + supplier notifiedPending → Held for review GSTR-2B reflects only your accepted invoices Reconciliation then compares GSTR-2B with your purchase register Impact of IMS:
Adds manual responsibility Improves visibility into supplier errors Prevents accidental ITC claims Makes reconciliation more structured IMS is manual. Reconciliation after IMS can (and should) be automated.
Maximizing ITC: Strategic Best Practices for 2026 Beyond basic compliance, strategic ITC management can increase your ITC recovery rate by 15–25% and reduce compliance time by 60–70%. The goal is to move from reactive filing to a proactive, process-driven approach that protects cash flow , avoids reversals, and ensures that no eligible credit is missed.
Finance teams that consistently maximize ITC recovery usually follow eight strategic practices:
1. Implement Monthly ITC Reconciliation (Don’t Wait Until the Filing Deadline): Reconciling every month, right after GSTR-2B is released on the 14th/15th, helps you catch errors early, follow up with suppliers, and resolve mismatches without last-minute panic. Why it works:
You detect issues before they snowball Suppliers still have time to correct filings You avoid missing the November 30 annual cutoff 2. Maintain a Vendor Compliance Scorecard: A vendor compliance scorecard helps you track which suppliers consistently file GSTR-1 on time and which ones create ITC risk. Best practices:
Classify vendors as Green, Yellow, or Red based on filing behavior Set up reminder protocols Delay or hold payments for chronic non-compliance 3. Use Automation for GSTR-2B Reconciliation: Manual reconciliation becomes unmanageable when you have large invoice volumes. GST compliance automation speeds up matching and reduces errors.Automation benefits include:
High-accuracy matching Flagging mismatches instantly Clean audit trails Alerts for missing or incorrect invoices 4. Review Expense Categories for Blocked Credit Mapping: Mapping blocked credit categories directly in your accounting system helps prevent accidental claims. Key actions:
Review GL codes annually Identify Section 17(5) categories Pre-tag mixed-use or partially eligible expenses 5. Maintain Robust Documentation for Audit Defense: Strong documentation reduces audit stress and protects your legitimate ITC claims. Every business should maintain a complete digital trail that includes invoices, payment proofs, GSTR-2B files, IMS action logs, vendor communication records, and reversal workings.
6. Conduct Quarterly ITC Health Checks: Quarterly reviews help you stay ahead of errors and compliance risks. Review areas:
ITC claim rate Reversal patterns Blocked credit leakage Industry benchmark comparisons Consultant review for complex cases 7. Stay Updated on GST Amendments and Circulars: Staying updated on GST amendments and circulars is essential because the rules evolve frequently and can directly impact your ITC eligibility and filing process.
How Mysa Helps You Maximize ITC and Stay Compliant Every ITC challenge in this article: missed credits, supplier non-compliance, IMS complexity, mismatches in GSTR-2B, blocked credits, and documentation gaps, comes from one root issue: finance teams are forced to navigate GST systems that are slow, manual, and fragmented. Mysa fixes this by bringing every ITC workflow into one automated, audit-ready platform.
Mysa’s reconciliation engine eliminates the biggest problem: mismatching purchase registers with GSTR-2B. Instead of spreadsheets and manual checks, Mysa automatically matches invoices across your books, supplier filings, and IMS-approved documents. Any mismatch is flagged instantly, helping you recover ITC you would otherwise lose.
A major advantage is vendor compliance intelligence. Mysa tracks supplier behavior: late GSTR-1 filing, wrong GSTIN entries, frequent mismatches, missed invoices by vendors that the finance team is unaware of, and scores vendors based on risk. This helps you intervene early, before non-compliant suppliers block your ITC.
IMS has added complexity to ITC in 2025. Mysa simplifies this by monitoring invoices as they appear in the Invoice Management System, identifying which ones need your action, and alerting you before auto-acceptance causes issues. IMS remains a manual GST portal step, but Mysa ensures you never miss it.
Documentation is another pain point for most finance teams. Mysa automatically stores invoices, payment proofs, GSTR-2B downloads, reversal workings, and vendor correspondence in a clean audit-ready archive. When a notice arrives, you can find supporting documents in seconds.
Mysa’s differentiators compared to typical GST software include:
A true automation-first reconciliation engine Vendor compliance scoring to prevent ITC lossIntelligent documentation management , not just storageEnd-to-end ITC visibility from invoice upload to GSTR-2A reconciliation Audit-first design , built for real scrutiny scenariosIf your goal is to maximise ITC, avoid compliance surprises, and give your finance team more control with less manual effort, Mysa makes the entire process faster, more accurate, and completely audit-ready.
Frequently Asked Questions 1. What is the time limit to claim ITC under GST? The time limit to claim ITC under GST is November 30 of the following financial year or the date of filing your annual return, whichever is earlier. After this deadline, ITC becomes permanently ineligible, even if the purchase was genuine. This rule ensures that businesses keep their books updated and reconcile ITC on time. To avoid missing the deadline, it’s best to reconcile monthly after GSTR-2B is generated and track any pending supplier filings through IMS.
2. Can I claim ITC if my supplier didn’t file GSTR-1? No, you cannot claim ITC if your supplier hasn’t filed GSTR-1, because the invoice won’t appear in GSTR-2B, which is the government’s accepted ITC record. Even if the purchase is valid, ITC becomes ineligible until the supplier files correctly. In 2025, IMS makes this even stricter because only accepted invoices flow into GSTR-2B. The best solution is vendor follow-up, using compliance scorecards, and avoiding high-risk suppliers who frequently file late.
3. How do I reverse ITC for unpaid invoices beyond 180 days? If you don’t pay the supplier within 180 days, you must reverse the ITC previously claimed and pay 18% interest from the date of initial claim. This reversal is reported in GSTR-3B Table 4(B). Once the payment is finally made, you can reclaim the ITC in that month’s return. Many businesses track 180-day invoices to prevent accidental non-payment, since missed reversals often appear during audits and trigger interest liabilities.
4. Can I claim ITC on capital goods? Yes, ITC on capital goods, such as machinery, equipment, and production assets, is allowed as long as the purchase is for business use and not blocked under Section 17(5). ITC is also permitted on capital goods used in manufacturing and trading operations. The only exceptions are capital goods used for construction of immovable property or those partly used for non-business or exempt activities. Always ensure that invoices are correct, appear in GSTR-2B, and are paid within 180 days.
5. What if the invoice is missing from GSTR-2B? If an invoice is missing from GSTR-2B, ITC cannot be claimed in that month because it isn’t validated by the GST portal. The most common reasons are supplier non-filing, incorrect GSTIN entry, or filing in the wrong period. After 2025 IMS changes, an invoice may also be pending or rejected in IMS. You should follow up with the supplier, confirm whether GSTR-1 was filed correctly, and ensure you accept the invoice in IMS so it flows into GSTR-2B.
6. What is the difference between input credit and blocked credit? Input tax credit (ITC) is GST paid on business purchases that you’re allowed to subtract from your output tax. Blocked credit refers to GST that cannot be claimed even if the expense is for business such as food and beverages, personal vehicles, club memberships, or construction of immovable property. These items are restricted under Section 17(5). Knowing the difference prevents wrongful ITC claims and avoids penalties or reversals during reconciliation and audits.
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