4 Common Mistakes to Avoid With GST Input Tax Credit

GST Input Tax Credit involves the credit a business can claim for GST already paid on its purchases, which offsets the tax payable on its sales. While the process itself is usually straightforward, businesses commonly run into avoidable issues along the way. Here are the mistakes we see most often, and how to steer clear of them.

Mistake 1

Claiming credit before the supplier has filed their return.

Mistake 2

Claiming credit on blocked items like certain personal-use goods.

Mistake 3

Not reversing credit when payment to the supplier is delayed beyond the prescribed window.

Mistake 4

Poor invoice record-keeping making reconciliation difficult.

How to Avoid These Issues

Most of these mistakes come down to preparation. Having the right documents ready — Valid tax invoice from a registered supplier, Proof that goods/services were actually received, Supplier's return reflecting the same invoice, among others — and understanding the process before you start goes a long way toward a smooth outcome with conditions and restrictions notified under GST law.

Quick Reference: What You'll Need

• Valid tax invoice from a registered supplier
• Proof that goods/services were actually received
• Supplier's return reflecting the same invoice
• Payment made to the supplier within the prescribed period