---
title: "Input Tax Credit (ITC): GST Meaning & Rules | Model Diplomat"
description: "Input Tax Credit (ITC) allows GST-registered businesses in India to deduct tax paid on purchases from their sales tax, preventing tax cascading."
url: "https://modeldiplomat.com/learn/glossary/input-tax-credit"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- Input Tax Credit is the mechanism under India's GST that allows a registered business to deduct tax paid on purchases from the tax it owes on sales.
- What are the conditions for claiming Input Tax Credit under GST?
- What are blocked credits under Section 17(5)?
- How does ITC differ from a GST refund?
- Is there a time limit to claim Input Tax Credit?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

Input Tax Credit is the mechanism under India's GST that allows a registered business to deduct tax paid on purchases from the tax it owes on sales.

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## Timeline

1. 1 July 2017

   Input Tax Credit (ITC) is the foundational anti-cascading device of India's Goods and Services Tax, introduced when the GST regime took effect on under the…

2. 1 January 2022

   Since , by virtue of Section 16(2)(aa), a recipient can claim credit only to the extent the supplier has reported the invoice in its GSTR-1 and it appears in…

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Example

In its 50th meeting on 11 July 2023, the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, approved measures including system-based intimation of Input Tax Credit mismatches between GSTR-2B and GSTR-3B to curb fraudulent claims.

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