Guides · GST
Input tax credit under GST, explained
Input tax credit — ITC — is the mechanism that stops GST from stacking up at every stage. It lets a registered business reduce the tax it owes on sales by the tax it already paid on its purchases.
What input tax credit is
GST is a tax on value added at each stage. Input tax credit is what makes that work: the GST a business pays on the goods and services it buys becomes a credit it can use against the GST it collects on what it sells. Only the difference is paid to the government.
Without ITC, tax would pile on tax down the chain. With it, the burden lands only on the final consumer, and each business in between is taxed only on the value it adds.
The basic conditions
To claim ITC, a business generally needs a valid tax invoice, must have received the goods or services, the supplier must have paid the tax and reported the supply, and the claim must be made within the time limit the law allows. Credit is also blocked on certain categories of purchases.
The practical catch is matching: a buyer's credit depends on the supplier having declared the same invoice. If the supplier's return and the buyer's records do not line up, the credit can be delayed or denied.
How Lekha keeps purchases ready for ITC
Lekha captures supplier and import documents — you upload, the fields are read for you, and you confirm or correct — and records each bill with its tax fields and the source document kept, so the purchase register that feeds an ITC claim is complete.
Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.
Questions
- What is input tax credit?
- It is the credit for GST paid on business purchases, used to reduce the GST owed on sales, so tax applies only to the value each business adds.
- What do I need to claim ITC?
- Generally a valid tax invoice, actual receipt of the goods or services, the supplier having paid and reported the tax, and a claim made within the time limit the law allows.
- Why can input tax credit be denied?
- Common reasons are a supplier not reporting the invoice, a mismatch between the buyer's records and the supplier's return, a missing invoice, or a blocked category of purchase.
This guide is general information, not legal or tax advice. Confirm the current rules and your own circumstances for any specific case.