GST Input Tax Credit Rules: Section 16 Conditions, GSTR-2B, Blocked Credits and the 180-Day Payment Rule

You can claim GST input tax credit on purchases used in your business only when you hold a valid tax invoice, the supplier has reported it so that it shows in your GSTR-2B, you have received the goods or services, the supplier has paid the tax, and you have filed your own return. The claim must be made by 30 November after the financial year, and credit on items blocked by section 17(5), such as staff food or most cars, is never available. If you do not pay the supplier within 180 days of the invoice, the credit has to be reversed until you do.

Sources checked: 20 October 2026

Facts checked on 20 October 2026 against sections 16, 17 and 50 of the CGST Act and rules 36, 37 and 37A of the CGST Rules on the CBIC tax information portal, and GSTN advisories on the Invoice Management System on gst.gov.in.

Key facts

Condition or limit	What the law says	Source
Use	Goods or services used, or intended to be used, in the course of business	Section 16(1)
Document	Tax invoice or debit note from a registered supplier (or other prescribed document)	Section 16(2)(a), rule 36(1)
Reported by supplier	Invoice in supplier's GSTR-1, GSTR-1A or IFF and communicated in your GSTR-2B	Section 16(2)(aa), rule 36(4)
Receipt	Goods or services received (last lot, for goods in instalments)	Section 16(2)(b)
Tax paid	Supplier has actually paid the tax	Section 16(2)(c)
Your return	You have filed GSTR-3B	Section 16(2)(d)
Time limit	30 November after the financial year, or annual return if earlier	Section 16(4)
Supplier payment	Pay value and tax within 180 days of invoice, or reverse with interest	Section 16(2), rule 37
Supplier's GSTR-3B	Not filed by 30 September after the year: reverse by 30 November	Rule 37A
Blocked credits	Listed in section 17(5)	Section 17(5)

What are the conditions for claiming input tax credit?

Section 16(2) of the CGST Act sets six conditions, and every one must be met for each invoice:

1. You hold a tax invoice or debit note issued by a registered supplier. Rule 36(2) allows credit even if some particulars are missing, provided the document shows the tax charged, a description of the goods or services, the total value, both GSTINs and, for inter-State supplies, the place of supply.
2. The supplier has reported the invoice in GSTR-1, GSTR-1A or the IFF, and it is communicated to you in GSTR-2B (section 16(2)(aa), rule 36(4)).
3. You have received the goods or services. Goods delivered to someone else on your direction count as received. For goods in lots, credit comes with the last lot.
4. Your credit for that supply has not been restricted in the statement under section 38 (section 16(2)(ba)).
5. The supplier has paid the tax to the government, in cash or through credit.
6. You have filed your return under section 39.

Two further rules matter. You cannot claim credit on the tax component if you have claimed income-tax depreciation on it (section 16(3)). And credit is only for business use: goods or services for personal consumption are blocked.

Why does GSTR-2B matter so much?

Because since 1 January 2022 the law allows credit only for invoices that appear in your GSTR-2B. GSTR-2B is a monthly statement generated from what your suppliers report. If a supplier files GSTR-1 late, the invoice moves to a later month's GSTR-2B and you claim it then. If the supplier never reports it, you cannot claim it, however genuine the purchase.

The Invoice Management System (IMS). From the October 2024 tax period, GSTN introduced IMS on the portal, where you can accept, reject or keep pending each invoice or record your suppliers upload. Later changes include:

• from the October 2025 tax period, certain credit notes and amendments can be kept pending for one tax period, and you can declare the actual credit to be reversed where you had not claimed, or had claimed only part of, the credit on the original invoice (GSTN advisory, 23 September 2025);
• an Excel-based IMS offline tool for bulk actions (GSTN advisory, 21 April 2026).

GSTR-2B is generated on the 14th of the following month from your actions. Credit on a rejected record is not available in GSTR-2B, but you can change an action and recompute GSTR-2B until you file GSTR-3B for that period (GSTN advisory, 13 November 2024). QRMP filers get GSTR-2B for the last month of each quarter only.

What is the time limit for claiming credit?

The 30th of November following the end of the financial year to which the invoice or debit note relates, or the date you file that year's annual return, whichever is earlier (section 16(4)). For example, credit on an invoice dated March 2026 must be taken by 30 November 2026.

Where your registration was cancelled and later revoked, section 16(6) lets you claim credit that was still in time on the date of cancellation, in a return filed by the later of the normal time limit or 30 days from the revocation order. Our guide to GST registration cancellation and revocation explains revocation.

What is the 180-day payment rule?

If you do not pay a supplier the value of the supply and the tax on it within 180 days of the invoice date, you must reverse the credit (section 16(2), second proviso; rule 37):

• reverse an amount in proportion to the unpaid part, with interest under section 50;
• do it in the GSTR-3B for the tax period immediately after the 180 days;
• re-claim the credit when you pay; the 30 November time limit does not apply to the re-claim (rule 37(4)).

The rule does not apply to supplies taxed under reverse charge. Supplies made without consideration under Schedule I, and amounts added to value under section 15(2)(b), are treated as paid.

What if my supplier does not pay the tax?

Rule 37A deals with suppliers who report an invoice in GSTR-1 but do not file GSTR-3B. If the supplier has not filed GSTR-3B for that period by 30 September after the financial year in which you took the credit, you must reverse the credit in a GSTR-3B filed by 30 November of that year. If you do not, it is payable with interest. When the supplier later files GSTR-3B, you can take the credit again.

Before accepting a new supplier, check that its registration number is in the right format with our free GSTIN check, and confirm its filing record on the GST portal.

Which credits are blocked under section 17(5)?

Section 17(5) lists items where credit is not available even if they are used in business. In summary:

• Motor vehicles for up to 13 persons (including the driver), and vessels and aircraft, unless used for further supply of them, passenger transport, training, or (for vessels and aircraft) carrying goods; and their general insurance, servicing, repair and maintenance on the same basis.
• Food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, life and health insurance, and renting of the blocked vehicles, unless used to make an outward supply of the same category or as part of a taxable composite or mixed supply.
• Club, health and fitness memberships, and travel benefits to employees on leave, such as leave or home travel concession. For the food, insurance, membership and travel items, credit is allowed where a law obliges the employer to provide them.
• Works contract services and goods or services for constructing immovable property on your own account, other than plant and machinery, including capitalised repairs and additions.
• Tax paid under the composition scheme (section 10), and supplies received by a non-resident taxable person (except imports).
• Goods or services for corporate social responsibility obligations.
• Goods or services for personal consumption.
• Goods lost, stolen, destroyed, written off, or given away as gifts or free samples.
• Tax paid under section 74 for periods up to FY 2023-24.

The 57th GST Council meeting on 8 October 2026 recommended removing some of these restrictions, including on outdoor catering, health and life insurance, telecommunication towers, pipelines outside the factory, free samples and goods destroyed on expiry of shelf life as required by law. These are recommendations: the blocks above apply until the Act is amended.

How do I claim credit correctly each month?

1. Download GSTR-2B and act on each invoice in IMS: accept, reject or keep pending.
2. Match GSTR-2B with your purchase register: amount, tax, GSTIN, invoice number.
3. Chase suppliers whose invoices are missing, and do not claim those until they appear.
4. Exclude blocked items under section 17(5) and personal expenses.
5. Track supplier payments and reverse credit on invoices unpaid after 180 days.
6. Report credit in GSTR-3B, Table 4, and keep the reversal and re-claim figures consistent.
7. Before 30 November each year, sweep for any credit of the previous year still unclaimed.

Common mistakes

• Claiming from the purchase register rather than GSTR-2B.
• Missing the 30 November limit for invoices reported late by suppliers.
• Ignoring the 180-day rule for slow-paying accounts, which builds up interest.
• Claiming credit on staff meals, cars or gifts that section 17(5) blocks.
• Rejecting invoices in IMS by default, which removes genuine credit from GSTR-2B.
• Buying from non-filing suppliers, which leads to reversal under rule 37A.

What to do now

Reconcile GSTR-2B with your books every month, set a reminder for 30 November, and review supplier ageing for the 180-day rule. Mismatched credit is a common reason for notices; see GST notices explained. For a review of your credit claims or reconciliation support, ask our expert team through our GST services, our GST audit support, or book a consultation.