Input Tax Credit (ITC) Explained for Indian Businesses (2026)
What input tax credit is, the conditions to claim it, common reasons ITC gets blocked, and how clean records make claiming easy.
Input tax credit lets you offset the GST you paid on purchases against the GST you collect on sales — so you only pay tax on your value added. Claimed correctly, it directly protects your margin. Here is how it works. This is general information, not tax advice — GST rules, rates and thresholds change and vary by case, so confirm specifics with a qualified professional or the official GST portal.
How ITC works
If you paid GST on stock and expenses, you can reduce your output tax liability by that amount, paying only the net. Over a year this is a significant saving for a trading business.
Conditions to claim
- You have a valid tax invoice
- The goods/services were actually received
- The supplier has reported the invoice and paid tax
- You have filed your returns
- The purchase is eligible (some items are blocked)
Why records decide your credit
ITC often gets lost to missing invoices and mismatches. When purchases, expenses and sales all live in one system, your eligible credit is easy to compute and defend. MyGroce keeps purchase and expense records tied to GST so nothing slips.
Frequently asked questions
What is input tax credit?
ITC is the GST you paid on purchases, which you can offset against GST collected on sales — so you pay tax only on your value added, provided the conditions are met.
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