Complete Guide : Will I Get The GST Input Credit Or Not?

gst input credit

Complete Guide : Will I Get The GST Input Credit Or Not? 

GST has been welcomed with all the pomp and show, and deservingly so. It has inherent advantages. We all know that amount paid as GST on purchases or even expenses can be claimed as GST input credit. This was not possible in the earlier regime of VAT and Service Tax. 

Example: If you were dealing in sale of goods where VAT was chargeable and had paid service tax for availing service of Chartered Accountant, you could not avail the credit of service tax paid to your CA against payment of VAT. This is now possible under GST since there is no difference in tax on goods or services. Now, if your VAT payable on goods sold is Rs 30,000, and if you availed services of a CA and paid GST of say, Rs 18,000, then you will get a GST input credit of Rs 18,000 against payment of Rs 30,000 GST payable. Hence, you net GST payable will be Rs 12,000 only.

Woaahh, what a relief to an entrepreneur. But, but, but, there is little sad news, just little.

There are certain expenses, on which credit will not be allowed.

In following cases you won’t be allowed to claim GST Input Credit

  • Motor vehicles and conveyance charges
    Except: When you are engaged in the business of transport, which can be transportation of passengers or goods or motor driving training
  • Rent-a-cab service, Health Insurance, and Life Insurance
    Except: Provided as a part of business or composite supply
  • Travel benefits to employees
  • Food & Beverages, Outdoor Catering, Beauty Treatment, Health Services, Cosmetic & Plastic Surgery
    Except: When you are engaged in the business of above goods/services
    Example: Buying and selling cosmetics in the process of rendering beauty services will provide you the credit on purchase of cosmetics
  • Membership of Club or Fitness Centre or Health Centre
  • Goods/services used for construction of immovable property, whether for business or for personal use
  • Works contract services, when supplied for the construction of immovable property
    Except: One works contract service is input for another works contract service or Work Contracts Service supplied for construction of plant and machinery.
  • Goods/services used for personal consumption
  • GST has been paid under the composition scheme
  • Goods/services received by Non Resident Taxable Person
    Except: Non Resident is a taxable person under GST
  • Goods lost/stolen/destroyed/gifted/written off/distributed as free sample
  • Tax paid due to non payment of tax/short payment of tax / excessive refunds
  • ITC utilized or availed by way of fraud/willful misstatement/suppression of facts

GST paid on expenses or purchases other than above are fully allowed.


Also check : 1) How Can I Claim My GST Credit

                        2) GST Do’s And Dont’ts

                        3) GST  Invoice Formats

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