The government has notified new rules for claiming Input Tax Credit (ITC) under GST, aimed at tightening eligibility and preventing misuse of credit claims. As per the updated guidelines, taxpayers can now avail ITC only if the supplier has filed their GSTR-1 and the invoice details reflect in the recipient’s GSTR-2B. This shift places greater responsibility on recipients to ensure that their vendors are GST-compliant and up-to-date in return filings.

One of the major changes is the removal of the provisional 5% ITC allowance, which earlier permitted taxpayers to claim credit on invoices not yet reflected in GSTR-2 B. This makes reconciliation of purchase records with GSTR-2B mandatory before claiming any credit. Businesses will now need to closely monitor vendor compliance, failing which their eligible ITC could be delayed or denied, affecting cash flows and working capital cycles.

To support compliance, the GSTN portal has introduced automated reconciliation tools and alerts to notify taxpayers about mismatched invoices and non-filing suppliers. The government also clarified that ITC will not be available on invoices from entities whose registrations are suspended or cancelled. These new rules are part of a broader effort to enhance transparency, curb fake invoicing practices, and ensure that only genuine claims are passed through the GST system.