The four conditions
All four must be satisfied before credit can be claimed. The third is the one outside your control.
- You hold a tax invoice or debit note from a registered supplier
- You have actually received the goods or services
- The supplier has paid the tax to the government and reported the invoice
- You have filed the relevant return
The 180-day rule
If you claim credit and then fail to pay your supplier within 180 days of the invoice date, the credit is reversed and interest applies. It reverses again in your favour once you pay. Long payables cycles quietly create this exposure, which is why payables and credit belong in the same system.
Blocked credits
Some inputs never carry credit, regardless of documentation.
- Motor vehicles below the seating threshold, with narrow exceptions
- Food and beverages, outdoor catering, club and fitness memberships
- Works contract services for immovable property, other than plant and machinery
- Goods lost, stolen, destroyed, written off or given as free samples
- Personal consumption
Reconciliation is the real work
Credit you can claim is what appears in GSTR-2B, not what appears in your purchase register. When a supplier files late, files wrongly, or does not file at all, your register shows credit that GSTR-2B does not. Reconciling the two monthly — and chasing the suppliers behind the gaps — is what keeps working capital from silently leaking.
Common questions
What if my supplier never files their return?+
The credit does not appear in your GSTR-2B and you cannot claim it. Your recourse is commercial rather than statutory — chase the supplier, and consider withholding the tax component of payment until the invoice shows up in your 2B.
Can I claim credit on an invoice from a previous year?+
Only up to 30 November following the end of that financial year, or the date of filing the annual return, whichever is earlier. After that the credit lapses permanently.
How is credit set off against liability?+
IGST credit is used first, against IGST, then CGST, then SGST. CGST credit goes against CGST then IGST. SGST credit goes against SGST then IGST. CGST and SGST credit can never be set off against each other.