Introduction:

Latest amendments were done in October on GST particularly with regard to the Input Tax Credit (ITC), as the government tightened regulations, encouraged greater supplier-receiver alignment, and reinforced compliance.

In light of this, Input Tax Credit (ITC) claims are more than simply a tax compliance checkbox; they are an effective way for your business to reduce tax costs and improve cash flow.

CBIC announced the proposals from the 56th GST Council meeting:

Changes to the GSTR-9 form: Clearer placement of reclaimed ITC with references to CGST Rules 37, 37A, 38, 39, 42, and 43; addition of new ITC rows (A1, A2, H1, etc.).

What is input tax credit?

The term "Input Tax Credit" (ITC) refers to the tax paid on business purchases that can be deducted when paying output tax.

Who can claim?

ITC can be claimed by a person registered under GST only if he fulfils all the conditions as prescribed.

Conditions to claim an input tax credit under GST-

  1. The dealer should be in possession of tax invoice
  2. The said goods/services have been received
  3. GSTR-3B have been filed by the recipient
  4. The tax charged has been paid to the government by the supplier
  5. The recipient must have paid towards the invoice or debit note within 180 days from the invoice date
  6. When goods are received in installments ITC can be claimed only when the last lot is received
  7. ITC can be claimed only for taxable supplies of goods or services and the purchases made must be used in the furtherance of such business
  8. No ITC will be allowed if depreciation has been claimed on tax component of a capital good
  9. ITC on the document, such as invoice or debit note, must be claimed within the time limit defined which is earlier of two dates-
  10. 30th November of the year following the financial year in which the document is issued
  11. date of filing the annual returns
  12. CGST Rule 36(4) specifies that ITC claims made in GSTR-3B must match with the details appearing in GSTR-2B
  13. Must not be making supplies under the composition scheme

Major Amendments On GST:

  1. One of the main modifications is in Section 38 of the CGST Act, where "statement" has been used in place of the previous phrase "auto-generated statement."  This marks a change: GSTR-2B is no longer a completely automated, infallible declaration.
  2. The CGST Act's proviso to Section 34(2) has been changed to specifically state that a supplier may only use credit notes to lower its output tax obligation once the recipient has reversed the relevant ITC, if it has already been claimed.
  3. The third amendment to the CGST Rules, 2025, which modifies the forms of Annual Returns (GSTR-9, GSTR-9C), is yet another significant shift.  These revised forms require more detailed ITC disclosure, including new tables for reclaimed credit, cross-year availed credit, and a distinct distinction between freshly availed and reversed ITC.
  4. A new Table 6A1 is introduced to capture ITC from the preceding financial year claimed in the current year.
  5. Furthermore, as per Central Tax Notification No. 14/2025, provisional refunds would be limited as of October 1, 2025:
    1. Provisional refunds will not be available to taxpayers who have not finished the Aadhaar authentication process.
    2. Refunds for certain high-risk goods (like areca nuts, pan masala, essential oils, etc.) will be disallowed in specific cases.
  6. Regarding blocked credits, Section 17(5)(d) is subject to a significant retroactive adjustment.  by effect from July 1, 2017, the term "plant or machinery" has been replaced by "plant and machinery."

 

Conclusion:

Overall, the October 2025 GST amendments highlight a distinct change in policy: stricter supplier-receiver synchronization, increased transparency in ITC reporting, and a move away from passive system dependence toward active recipient validation.  To properly navigate this new environment, many organizations will need to quickly adjust to the Invoice Management System, reengineer operations, and tighten internal controls regarding ITC.