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With effect form 01.10.2022 please note that while claiming Input credit on inward supplies the recipient must ensure the below criteria are met: –

1. There is appropriate documentary evidence of such supplies on which input credit is availed i.e., Invoice or Debit note

2. Goods or service or both are received on such supplies for which the credit is claimed

3. Credit claimed in the GSTR 3B Return is reflected on your GSTR 2B

4. The supplier of such supplies has paid tax on such credit availed by you

5. The supplier of such supplies has filed the return on such credit availed by you

6. The credit availed is not a Restricted credit as per Sec 38 (Additional condition applicable from 01.10.22)

Below is the list of restricted credit as per Sec 38 if such supplies are from: –

  • A newly registered person within such period of taking registration as may be prescribed or
  • A supplier who has defaulted in payment of tax and where such default has continued for such period as may be prescribed; or
  • The output tax payable by whom in accordance with the statement of outward supplies furnished by him (i.e., GSTR1) under the said sub-section during such period, as may be prescribed, exceeds the output tax paid by him during the said period (i.e., GSTR 3B) by such limit as may be prescribed [i.e., The supplier has paid less Output tax in GSTR3B as compared to the output tax payable by him as per GSTR-1return filed by him)
  • A supplier who has availed input credit in his GSTR 3B in excess of credit available to him in his GSTR 2B
  • If the supplier has defaulted in discharging his tax liability in accordance with the provisions of sub-section (12) of section 49 subject to such conditions and restrictions as may be prescribed

Section 49(12) states that the Government can specify a maximum limit of output tax that can be paid using balances in the electronic credit ledger

As per Rule 86B, applicable taxpayers with aggregate outward taxable supply (i.e., excluding exempt and zero-rated supplies) greater than Rs.50 lakhs can utilise ITC up to 99% of their output tax liability, subject to exceptions. Thus 1% of their output tax has to be paid by electronic cash ledger otherwise if would result as default in discharge of liability

  • By such other class of persons as may be prescribed

Thus, this means that the government can add additional rules and restrictions.

Hope this article clarifies the issues related to criteria for Input Tax credit availment

If any queries or doubts relating to this do contact on 9833634051 or mail @

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I am Chartered Accountant with professional experience in Accounting, Auditing, Consulting and Compliance Services to diverse sectors of business for various regulatory laws. View Full Profile

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April 2024