Claiming Input Tax Credit Month by Month: the Checklist

Published 12 October 2026

Most credit disputes do not turn on a hard question of law. They turn on one condition out of seven that nobody checked in the month the credit was taken: a supplier who never filed, goods that had not arrived, a canteen bill that was always blocked, or an invoice taken a month after the deadline. By the time a notice arrives the month is two or three years old, and the evidence that would have answered it was never kept.

This guide is the hub for the set on credit procedure. It turns the law into a single checklist, says where the evidence for each condition comes from, and sets out the order in which a month’s credit is worked. The conditions themselves are explained in Input Tax Credit: the Conditions in Section 16(2) and Blocked Credits. This guide does not repeat them. It adds the evidence and the sequence.

Who carries the burden

Section 155 of the CGST Act provides that where any person claims that he is eligible for input tax credit, “the burden of proving such claim shall lie on such person”. Section 41 lets a registered person “avail the credit of eligible input tax, as self-assessed, in his return”. Credit is self-assessed in GSTR-3B, and proved later, if it is ever questioned, from what the person kept at the time.

What to have ready

Item	Where it comes from
Purchase register for the month, with supplier GSTIN, document number and date, value, tax by head	Books
Goods receipt notes, e-way bills, transport documents; for services, evidence that the service was rendered	Books and stores records; e-way bill portal
Payment records against each supplier, with invoice dates	Books (bank and creditor ledgers)
Bills of entry for imports	Customs records; ICEGATE data in GSTR-2B
Self-invoices and payment vouchers for reverse charge purchases from unregistered persons	Books
The month’s IMS dashboard and the draft GSTR-2B	Portal
Use classification of each purchase: business or not, taxable or exempt use, blocked or not	Books, with the person’s own working
Electronic Credit Reversal and Re-claimed Statement, and RCM Liability/ITC Statement balances	Portal, Services > Ledger
Exempt and total turnover for the month, for rules 42 and 43	Books; the person’s own GSTR-1

The checklist: section 16(2), condition by condition

Each condition in section 16(2) is cumulative. For each one, the table gives the evidence that shows it was met, and the place it is found.

Condition	What has to be true	Evidence, and where it is found
(a) Document	A tax invoice, debit note or other prescribed document is held	The document itself (books). Rule 36(1) lists the documents: a section 31 invoice; a self-invoice under section 31(3)(f), “subject to the payment of tax”; a debit note; a bill of entry; an ISD document. Where the supplier must issue e-invoices, rule 48(5) provides that an invoice issued any other way “shall not be treated as an invoice”, so the IRN on the document is part of the evidence.
Rule 36(2) particulars	The document carries the prescribed particulars	The document. The proviso to rule 36(2) accepts a document showing at least the tax charged, description, total value, both GSTINs and, for inter-State supplies, the place of supply.
(aa) Reported and communicated	The supplier has furnished the document in GSTR-1, GSTR-1A or IFF, and it has been communicated in GSTR-2B	Portal: the “ITC Available” part of the month’s GSTR-2B. Rule 36(4) makes GSTR-2B the communication.
(b) Receipt	The goods or services have been received, or receipt is deemed	Books: goods receipt notes, e-way bills, transport and delivery records. For goods in lots, the receipt of the last lot. Circular No. 241/35/2024-GST treats goods under an ex-works contract as received when the supplier hands them to the transporter at its premises, where property passes there.
(ba) Not restricted	The credit is not shown as restricted in the statement under section 38	Portal: GSTR-2B. Credit in its “ITC Not Available” table is not claimed. The GSTR-2B FAQs say that table now covers only two cases, section 16(4) and a place of supply in the supplier’s State where the recipient is in another; each restriction listed in section 38(2)(b) turns on a period or limit “as may be prescribed”.
© Tax paid by the supplier	The supplier has actually paid the tax	Not visible directly. Rule 37A gives it a deadline: credit is reversed where the supplier has not filed its GSTR-3B for the period by 30 September after the year. The amount appears in the September GSTR-2B. See Rule 37A.
(d) Own return	The recipient has filed its own return under section 39	Portal: the GSTR-3B in which the credit is taken.
Second proviso: 180 days	The supplier is paid value and tax within 180 days of the invoice, other than for reverse charge supplies	Books: creditor ledger ageing. Failing payment, rule 37 requires reversal, proportionate to the unpaid amount, with interest. See Rule 37.
Section 16(3)	Depreciation has not been claimed on the tax component	Books: fixed asset register and income-tax depreciation working
Section 16(4)	The credit is taken within the time limit	Portal: the filing date of the GSTR-3B against 30 November after the year of the document, or the annual return if earlier. See Time Limits.

Clause © after the Supreme Court’s order of July 2026

Clause © is the condition the recipient cannot check, and it has been challenged repeatedly as unfair to a buyer who paid the tax to an honest-looking supplier. The challenge has now been rejected.

Bhandari Scrap Traders v. Union of India (Supreme Court, SLP © No. 23931 of 2026 and connected petitions, order of 24 July 2026). The petitioners were purchasing dealers whose credit was denied because their suppliers had not paid the tax. They challenged a judgment of the Gujarat High Court of 1 May 2026 (SCA No. 749 of 2025) refusing to strike down or read down section 16(2)©. They relied on the line of cases under the Delhi VAT Act protecting bona fide purchasers. The Supreme Court held that the High Court’s analysis showed “no possibility of drawing parity” between a purchasing dealer under the CGST Act and “a purported bonafide purchasing dealer under the Delhi VAT Act”. It noted that the High Court had referred to section 41 and to sections 73 and 74, under which the purchaser may “re-avail the reversed ITC after the supplier-dealer is made to discharge the tax liability”. It held the High Court “fully justified in holding that no grounds were made out to declare Section 16(2)© of the CGST Act as unconstitutional or read down the provisions thereof”, and dismissed the petitions.

The order records one loose end. A special leave petition had been entertained against a decision of the Tripura High Court in Sahil Enterprises v. Union of India. The Court observed that the Tripura High Court had not undertaken the analysis the Gujarat High Court had. Until that petition is decided, the Tripura decision is the one line of contrary authority. For credit in any month, the practical effect is that clause © is enforced as written, and the remedy is reversal and re-availment, not a defence of good faith.

Section 17(5) as a gate

Section 17(5) is applied after section 16, not instead of it. A purchase that meets every condition above can still be blocked. Each purchase is classified, before the month’s return, as one of: blocked under section 17(5), used for non-business purposes, used exclusively for exempt supplies, used exclusively for taxable supplies including zero-rated ones, or common. The classification decides where the credit goes in table 4 of GSTR-3B:

Credit blocked under section 17(5), and the exempt and non-business shares under rules 42 and 43, are reversed in table 4(B)(1). Circular No. 170/02/2022-GST says such reversals are “absolute in nature” and are not reported in table 4(D).
Common credit is apportioned month by month under rules 42 and 43, and trued up for the year. The procedure is in Common Credit, Step by Step: Rules 42 and 43.

GSTR-2B carries blocked credit along with everything else, because it reflects what suppliers reported, not what the recipient may claim. The block is the recipient’s own assessment.

The month, in order

The order below follows the due dates. For a monthly filer, GSTR-1 is due on the 11th, GSTR-2B is generated on the 14th, and GSTR-3B is due on the 20th. Quarterly filers work to the quarter, as described in The QRMP Scheme.

During the month. Suppliers’ records appear on the IMS dashboard as they are saved. Each is matched to the purchase register and accepted, rejected or kept pending. The procedure is in The Invoice Management System and GSTR-2B.
The 14th. The draft GSTR-2B is generated, provided the previous month’s GSTR-3B has been filed. GSTN’s advisory of 16 November 2024 states that it is not generated otherwise.
Reconciliation. GSTR-2B is reconciled with the purchase register, and each difference is classified. See Reconciling Purchases with GSTR-2B. IMS actions are revised and GSTR-2B recomputed before GSTR-3B is filed.
Eligibility. Each record in GSTR-2B is tested against the checklist above: receipt, section 17(5), business use, and the 180-day position of older invoices.
Reversals. Permanent reversals go to table 4(B)(1). Temporary ones, which may be reclaimed later, go to 4(B)(2). In September’s GSTR-2B, the rule 37A amount appears for reversal by 30 November.
Reclaims. Credit reversed earlier in 4(B)(2) and now eligible again goes to 4(A)(5) and is also shown in 4(D)(1). The portal checks it against the Electronic Credit Reversal and Re-claimed Statement.
Reverse charge. Tax on reverse charge purchases is paid in cash in table 3.1(d), and the credit is taken in 4(A)(2) or 4(A)(3). The portal checks it against the RCM Liability/ITC Statement.
Filing. GSTR-3B is filed by the due date, with DSC or EVC. The table-by-table detail is in Reporting Credit in GSTR-3B Table 4, and the filing steps in Filing GSTR-3B and Paying the Tax.
After filing. Any intimation in FORM GST DRC-01C, for credit claimed above GSTR-2B, is answered within seven days under rule 88D. See Answering a DRC-01C.

The year-end dates

Four dates fall after the year ends and close the books on its credit.

Date	What happens	Provision
Due date of the September return	Annual true-up of rule 42 reversals	Rule 42(2)
30 September	The supplier’s GSTR-3B filing status fixes the rule 37A reversal	Rule 37A
30 November	Last date to take credit on the year’s invoices and debit notes, unless the annual return is filed earlier; last date for the rule 37A reversal	Section 16(4); rule 37A
30 November	Last date to rectify a GSTR-3B for the year	Section 39(9) proviso

Interest, and what follows a wrong claim

Credit “wrongly availed and utilised” carries interest under section 50(3), calculated under rule 88B(3). Credit is utilised only when the balance in the electronic credit ledger falls below the amount wrongly availed, and only to that extent. Circular No. 192/04/2023-GST clarifies that, for wrongly availed integrated tax credit, the total balance of integrated, central and State tax credit is considered, because any of them can pay integrated tax. The rate is eighteen per cent, as explained in The Three Electronic Ledgers.

Beyond interest, a wrong claim draws a DRC-01C intimation where credit exceeds GSTR-2B, a scrutiny notice in ASMT-10 (Answering a Scrutiny Notice on Credit), and in the end a demand under section 73 or 74 (periods up to 2023-24) or section 74A (2024-25 onwards), described in Notices and Demands.

What can still be put right

Credit not taken. It can be taken in any later GSTR-3B up to the section 16(4) date. See Time Limits.
Credit taken wrongly. It is reversed in table 4(B) of a later GSTR-3B, with interest where it was utilised, or paid through DRC-03.
An IMS action taken by mistake. After GSTR-3B is filed, the supplier re-reports the record and it is accepted then.
A reversed credit that becomes eligible again. It is reclaimed through 4(A)(5) and 4(D)(1). Rule 37(4) provides that the section 16(4) limit “shall not apply” to re-availing credit reversed earlier.

The routes and their time limits are mapped in Correcting Mistakes in Returns, and the consequences of a late return in Late Returns.

The set

The other guides in this set take each step in turn:

The procedure in order

Keep, for every purchase, the document, the receipt evidence and the payment record.
Act on each record in IMS as it appears, and recompute GSTR-2B after the 14th if any action changes.
Reconcile GSTR-2B with the purchase register and classify every difference.
Test each record against section 16(2), then against section 17(5), then apportion common credit under rules 42 and 43.
Reverse permanently in 4(B)(1), temporarily in 4(B)(2), and reclaim in 4(A)(5) with 4(D)(1).
Pay reverse charge tax in cash and take its credit in 4(A)(2) or 4(A)(3).
File GSTR-3B by the due date, and answer any DRC-01C within seven days.
At the year end, true up rule 42, reverse rule 37A amounts, and take any remaining credit by 30 November.

The next guide covers the reconciliation itself: what is compared, the kinds of mismatch, and what each means for the claim.

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