account_balance_walletInput Tax Credit (ITC) Calculator
Calculate net ITC available from purchases — with eligibility filter, reversals & closing balance
Opening Balance & Reversals
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Carried forward from previous period
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Ineligible / blocked credit to reverse
Purchase Invoices
ITC Formula
Input GST = Invoice Value × GST Rate / (100 + GST Rate)
Net ITC = Eligible ITC − Reversal
Closing ITC = Opening + Net ITC
Rule 17(5) Blocked: Cars, food, health insurance, club membership, works contract (for personal use)
What is Input Tax Credit (ITC)?
Input Tax Credit (ITC) is the GST paid on business purchases that you can deduct from the GST you owe on your sales. It prevents the cascading effect of tax-on-tax. A registered dealer who buys goods worth ₹1 Lakh + 18% GST can claim the ₹18,000 GST paid as credit against their output GST.
Not all purchases qualify for ITC — blocked credits under Rule 17(5) include motor vehicles (for personal use), food and beverages, club memberships, and certain construction expenses. ITC must be claimed within the time limit (annual return of the relevant year) and matched with supplier filings in GSTR-2B.
lightbulb Example Calculation
Scenario: Sharma Enterprises (restaurant equipment supplier in Chennai) — monthly purchases: Raw steel ₹2,00,000 + 18% GST, Packaging ₹50,000 + 12% GST, Office stationery ₹10,000 + 18% GST. Output GST on sales: ₹85,000
1ITC on steel = ₹2,00,000 × 18% = ₹36,000 | ITC on packaging = ₹50,000 × 12% = ₹6,000
2ITC on stationery = ₹10,000 × 18% = ₹1,800 | Total ITC available = ₹36,000 + ₹6,000 + ₹1,800 = ₹43,800
3GST payable = Output GST − ITC = ₹85,000 − ₹43,800 = ₹41,200 (net GST to government)
✓ Result: Sharma Enterprises needs to deposit only ₹41,200 as GST — saved ₹43,800 via Input Tax Credit on business purchases.
help_outlineHow to Use the ITC Calculator
- Enter the ITC Opening Balance — the credit balance carried forward from the previous GSTR-3B filing (from your GST portal's Electronic Credit Ledger).
- Enter any ITC Reversal amount — credits that must be reversed due to ineligible purchases, partial use for exempt supplies, or blocked credits under Rule 17(5).
- Add each Purchase Invoice: supplier name, invoice value (GST inclusive), and GST rate. Uncheck "ITC Eligible" for invoices where ITC is blocked (e.g., personal car, food, health insurance).
- Click Add Invoice Row to add multiple suppliers in the same period. Each row's ITC is computed from the GST component of the invoice value.
- Click Calculate ITC to see eligible ITC, reversal, net ITC available, and closing balance — which can be used to offset against output GST in GSTR-3B.
Benefits
- Accurately calculates net ITC after applying Rule 17(5) blocked credit restrictions — avoids future reversals and GST notices
- Tracks opening and closing ITC balance across periods — essential for GSTR-3B reconciliation
- Mix eligible and ineligible invoices in one calculation — auto-separates ITC amounts
- Shows net GST cash payable: Output GST − Net ITC — plan cash outflow before GSTR-3B due date
- Identifies blocked credit purchases upfront — prevents claiming credits that must later be reversed with interest
Key Terms
- ITC (Input Tax Credit)
- GST paid on business purchases that can be offset against GST collected on your sales — reducing net tax deposited to government. Available only on GSTN-registered supplier invoices reflected in GSTR-2B.
- ITC Reversal
- Credits that must be returned: used for exempt supplies, personal consumption, supplier cancelled invoices, or any blocked credit under Rule 17(5). Reversal with interest (18% p.a.) if taken wrongly.
- Rule 17(5) — Blocked Credits
- ITC NOT available on: motor vehicles (for personal use), food/beverages, outdoor catering, club memberships, beauty treatment, health insurance, works contract for immovable property, and goods/services for personal consumption.
- GSTR-2B
- Auto-populated ITC statement generated on the 14th of each month — shows ITC available based on supplier GSTR-1 filings. ITC can only be claimed for invoices appearing in GSTR-2B (Rule 36(4)).
- Electronic Credit Ledger
- Your GST portal account showing cumulative ITC balance available. Separate from the Cash Ledger (cash deposited for tax payment). ITC from Credit Ledger is utilized before cash payment.
quizFrequently Asked Questions
What purchases are blocked from ITC under Rule 17(5)?
Rule 17(5) blocks ITC on: (1) Motor vehicles with seating capacity ≤ 13 persons (unless used for transportation of passengers, goods, or for resale/training). Trucks and buses qualify for ITC. (2) Food and beverages, outdoor catering, beauty treatment, health services, cosmetic surgery. (3) Membership of clubs, fitness centres, health clubs. (4) Travel benefits like Leave Travel Allowance or home travel concession to employees. (5) Works contract services for construction of immovable property (except plant and machinery). (6) Goods or services for personal use (not business). Health insurance paid for employees is also blocked — except where the employer is required by law to provide it (factories with statutory health provisions).
Can I claim ITC if my supplier has not filed GSTR-1?
No — as per Rule 36(4) and Section 16(2)(aa), ITC can only be claimed to the extent the invoice appears in your GSTR-2B (auto-populated from supplier's GSTR-1 filing). If your supplier fails to file GSTR-1, the invoice won't appear in GSTR-2B and you cannot claim that ITC. This has become a major pain point for businesses dealing with non-compliant suppliers. Best practice: (1) Check GSTR-2B on the 14th of each month before filing GSTR-3B; (2) Follow up with suppliers to file on time; (3) Include a GST compliance clause in vendor agreements; (4) Prefer suppliers with 100% GSTR-1 filing history.
What is the time limit for claiming ITC under GST?
ITC for a financial year must be claimed by the earlier of: (1) November 30th of the following year (i.e., GSTR-3B for October filed by November 30th); or (2) The date of filing the annual return GSTR-9 for that year. Example: ITC on an invoice from FY 2024-25 must be claimed in GSTR-3B by November 30, 2025, or the GSTR-9 filing date — whichever is earlier. ITC not claimed within this window is permanently lost. Always reconcile purchase register with GSTR-2B monthly to ensure no ITC is left unclaimed due to timing or supplier filing gaps.
How does ITC reversal work when I use purchases for both taxable and exempt supplies?
If a business makes both taxable and exempt supplies (e.g., a company selling GST-applicable products and also providing exempt financial services), ITC on common inputs must be reversed proportionally — using Rule 42 and 43. Formula: Reversal = Total ITC × (Exempt Supply Value / Total Turnover). This is calculated annually and adjusted monthly on a provisional basis. For example: if 20% of turnover is from exempt supplies, 20% of common ITC must be reversed. ITC exclusively for exempt supplies must be fully reversed. ITC exclusively for taxable supplies is fully eligible. Consult a GST consultant for accurate annual reversal computation.
Can I claim ITC on health insurance premiums paid for employees?
Generally No — health insurance premiums are blocked under Rule 17(5)(b) as a non-eligible expense. However, there is an exception: if the employer is legally required to provide health insurance to employees under any law (e.g., factories under the Employees' State Insurance Act, or companies mandated by contract to provide health cover), ITC on that statutory component is eligible. For most companies that voluntarily provide group health insurance as an employee benefit, the GST paid (18%) on the premium cannot be claimed as ITC. This is a significant cost — an ₹20 Lakh group premium attracts ₹3.6 Lakh GST that becomes a sunk cost.