Section 16(2): the conditions for claiming input tax credit

The conditions

• Clause (a): you hold a tax invoice, debit note or other prescribed tax-paying document.
• Clause (aa): the details of the invoice or debit note have been furnished by the supplier and communicated to you in GSTR-2B.
• Clause (b): you have received the goods or services, including goods delivered to another person on your direction.
• Clause (ba): the credit is not restricted in the details communicated under Section 38.
• Clause (c): the tax charged has actually been paid to the Government by the supplier, in cash or through credit.
• Clause (d): you have furnished your return under Section 39.

Payment within 180 days

The second proviso to Section 16(2), with Rule 37, requires you to pay the supplier the value plus tax within 180 days from the invoice date. If not paid, the credit must be reversed with interest. It can be re-claimed once payment is made. Goods received in lots are treated as received on the last lot.

Practical controls

Reconcile purchases with GSTR-2B every month, track supplier GSTR-3B filing for Rule 37A, keep proof of receipt such as e-way bills, delivery challans and GRNs, and age your creditors to catch the 180-day limit. Officers increasingly demand proof of movement of goods where a supplier is found non-existent.

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This guide explains the law in general terms as of October 2026. Time limits and requirements can depend on the facts of your case and on the notice you received.