Input tax credit eligibility

Establish the transaction and recipient

Match the invoice to the correct registered entity and GSTIN. Identify what was purchased, where it was received and how it is used in the business. A group company’s expense or a personal purchase should not enter the claim merely because it was paid from a business bank account.

Keep purchase orders, invoices and receipt evidence together. For services, retain records showing delivery or performance appropriate to the service rather than looking only for a goods-receipt note.

Review the conditions for credit

Section 16 sets the eligibility conditions, while section 17 addresses apportionment and blocked credits. Check the operative provisions for the period and transaction, including document requirements, receipt, supplier reporting, tax-payment conditions and return filing.

Reconcile the purchase register with the relevant GST statement and investigate missing or mismatched records. Acceptance in an invoice-management workflow should not be treated as a legal determination that every condition has been met.

Screen blocked and restricted categories

Review the specific exclusions and exceptions before claiming categories such as vehicles, employee-related benefits, construction-related expenditure or goods disposed of without an ordinary taxable sale. The detailed use and statutory exception can matter.

Do not decide solely from the expense account name. For example, a vehicle-related invoice needs the vehicle type, use and applicable exception assessed; classifying it as business travel does not settle eligibility.

Apportion mixed-use expenditure

Identify purchases used for taxable and exempt activities, or for business and non-business purposes. Keep the allocation basis and applicable reversal workings with the claim. Common expenses need a consistent, supportable treatment.

Reconcile periodic calculations with any required year-end adjustment. Preserve the figures used and the reason for corrections so later reviewers can follow the credit movement.

Track timing and payment conditions

Maintain invoice dates, receipt dates, supplier payment history and the period in which credit is claimed. Assess the applicable time limit and any specific relief for the year concerned rather than carrying forward an older deadline automatically.

Review reversals and possible reclaims when conditions are not met or are met later. Keep a separate record for temporary reversals and permanently ineligible amounts; do not reclaim all prior reversals as one undifferentiated total.

Build the review schedule

• Supplier GSTIN, invoice reference and tax amounts.
• Recipient GSTIN and evidence of business use.
• Receipt or service-performance evidence.
• Statement match status and supplier-query history.
• Blocked-credit or apportionment assessment.
• Payment status, claim period and timing checks.
• Reversal, reclaim and adjustment references.

Reconcile the return and ledger

Compare the final eligible amount, reversals and reclaims with the return fields and books. Explain differences between auto-populated figures and the filed return rather than forcing the accounting total to match without analysis.

For example, an invoice may match the statement but relate partly to exempt activities. The reconciliation can be correct while the full tax amount remains unavailable as credit. Document both the match and the eligibility adjustment.

Retain the decision evidence

Keep the filed return, workings, invoices, confirmations and unresolved queries by period. Assign follow-up owners for missing supplier records and review approaching time limits before the filing cycle closes.

Kosha.Services can help reconcile purchase records and prepare an eligibility and reversal schedule. Provide invoice-level data and the actual use of purchases so the review goes beyond a statement-matching exercise.