Input Tax Credit
ITCThe GST a business pays on its purchases that it can set off against the GST it collects on sales — claimable only for invoices that appear in its GSTR-2B (Rule 36(4) / Section 16(2)(aa)).
Input Tax Credit is the mechanism that stops GST from cascading: the tax you pay suppliers on inputs is credited against the tax you owe on your outputs, so you remit only the net. For most Indian businesses ITC is a large, recurring figure — getting it right is a direct cash-flow lever, not a compliance afterthought.
The catch is eligibility. Under Rule 36(4) and Section 16(2)(aa), you can claim ITC on an invoice only if your supplier has reported it and it appears in your GSTR-2B. An invoice booked in your purchase register but missing from 2B is blocked credit — real money you cannot use until the supplier files. Claiming credit that isn't in 2B is recoverable by the department with interest and penalty.
Protecting ITC is therefore a monthly reconciliation: match every booked purchase against 2B, chase suppliers whose invoices haven't appeared, and exclude anything the portal marks ineligible or pending in IMS. Across a few hundred invoices this is impractical by hand, which is why it is the headline output of GST reconciliation.
