The basic idea
Input tax credit (ITC) is the GST you paid on business purchases, which you get to offset against the GST you collect on sales — you only pay the government the difference.
It applies to purchase bills, and to business expenses too, as long as the vendor is GST-registered and the expense is genuinely for the business.
What quietly falls outside it
Certain categories are excluded or restricted by rule regardless of whether tax was paid — some of these are personal-use items misfiled as business ones, and some are specific categories the law simply blocks credit for.
The other common way credit is silently lost: a vendor who doesn't file their own return correctly, which can affect whether their buyers' credit reflects properly on the government portal.
Marking eligibility at the point of entry — not guessing at filing time — is what keeps your ITC total trustworthy instead of a monthly reconstruction project.
LedgrBook handles this automatically. The parts of this guide your bills already know.
See how →Building it as you go
The businesses that never scramble at filing time are the ones where every purchase bill and every GST-bearing expense is tagged for ITC eligibility the moment it's recorded — so the GSTR-3B figure is a report, not a research task.
General information, not professional tax advice — confirm specifics with your CA.
