The Goods and Services Tax (GST) Department has issued a clarification on the eligibility and conditions for availing Input Tax Credit (ITC) for Limited Liability Partnerships (LLPs), aiming to resolve ambiguities faced by tax practitioners and business owners. The clarification, released through an official circular in May 2025, confirms that LLPs are entitled to claim input credit on goods and services used in the course or furtherance of business, similar to companies and proprietorships. This includes purchases of raw materials, office supplies, professional services, and capital goods, provided all compliance conditions under Section 16 of the CGST Act are met.

One of the key takeaways from the circular is that LLPs must ensure that suppliers have filed their GSTR-1 and GSTR-3B for the corresponding period for ITC to be reflected and eligible in GSTR-2 B. Additionally, input credit can only be claimed if the tax invoice contains the LLP’s GSTIN, and the goods or services have been received at the registered business address. The department also reiterated that non-payment to suppliers within 180 days from the invoice date would lead to a reversal of the claimed credit, further stressing timely payments and reconciliation.

Furthermore, the GST Department emphasized that personal expenses, blocked credits under Section 17(5), or ITC related to non-business use remain ineligible, even for LLPs. Credits on items like motor vehicles, club memberships, and employee benefits—unless specifically allowed—cannot be availed. The clarification aims to streamline audits and prevent misuse of ITC provisions, especially as LLPs grow in sectors like consulting, e-commerce, and manufacturing. Tax professionals welcomed the move as it brings clarity, reduces disputes, and encourages better GST compliance within the LLP ecosystem.